Kleinunternehmerregelung - VAT for small entrepreneurs

For the so‑called small entrepreneur, there are significant simplifications in Germany with respect to VAT. Thanks to the small‑business scheme, the German tax office does not levy turnover tax on sales and there is therefore no obligation to file advance VAT returns.

However, a small entrepreneur is required only to submit an annual VAT return to the German tax office.

What are the consequences of the small‑business scheme?

A small entrepreneur may not show VAT on invoices and has no right to deduct input tax. If they wish to opt out of the small‑business scheme and nevertheless submit advance returns and account for VAT in Germany, they may file an application with the tax office. This decision is binding for five years and cannot be revoked.

Requirement: having a small business in Germany

From 2025 a small entrepreneur is one whose total turnover including VAT did not exceed 25,000 euros in the previous calendar year and will not exceed 100,000 euros in the current year. The expected turnover for the current year is based on the anticipated development of sales. In the year the business is started it is assumed that the limit of 25,000 euros will not be exceeded.

Required documents: no separate application needed

The small‑business scheme applies by law. No separate application is required. When setting up a business in Germany, the expected turnover must be stated in the tax registration questionnaire.

Legal basis: § 19 Umsatzsteuergesetz (German VAT Act)