Tax changes from 2025 for entrepreneurs in Germany

The thresholds at which businesses must prepare balance sheets and double-entry bookkeeping under the tax law have been raised since 2025.
Previously there was a turnover limit of EUR 600,000.00 per year, up to which companies were not required to prepare balance sheets, from 2025 a company with a turnover of up to EUR 800,000.00 will not be required to prepare balance sheets.
With regard to the profit generated, the threshold increased from 01.01.2025 from the previous €60,000.00 to €80,000.00.
If one of these thresholds is exceeded, simple accounting with a profit and loss statement can initially continue until the IRS orders double-entry bookkeeping.
If one of the thresholds has been exceeded and is not expected to be exceeded again in the future, you can apply for an exemption from double-entry bookkeeping with the tax authority.
As of 01.01.2025, the limit for a small entrepreneur (Kleinunternehmer) to convert to VAT (Mehrwertsteuer) in Germany has also changed. A small entrepreneur is entitled to VAT exemption if his annual turnover does not exceed the limit of EUR 25,000.00 (by the end of 2019 it was EUR 17,500.00, and by the end of 2024 it was EUR 22,000.00). A small trader can voluntarily switch to VAT, but he must consider whether it is beneficial for him, taking into account all the costs involved and the prices for customers. It is often worth consulting a tax advisor to carefully analyze the benefits and obligations of such a change.