Glossary · Taxes

Small business VAT exemption (Kleinunternehmerregelung)

Also: Kleinunternehmerregelung, Kleinunternehmer, small business scheme

In short

Under the small business VAT exemption, a business's turnover is exempt from VAT if its total turnover did not exceed €25,000 in the previous year and does not exceed €100,000 in the current year. It applies regardless of the legal form.

Small business VAT exemption (Kleinunternehmerregelung) explained

The thresholds have applied at this level since 2025 (Sec. 19 (1) UStG). Anyone using the scheme does not show VAT on invoices and cannot deduct input tax. You make the decision in the tax registration questionnaire. You can waive it, for example if you invest a lot and want to deduct input tax; the waiver binds you for at least five calendar years (Sec. 19 (3) UStG). A GbR, UG and GmbH can also be small businesses for VAT purposes. The threshold has nothing to do with liability, trade registration or bookkeeping obligations; it only concerns VAT.

Legal basisSec. 19 UStG

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Related terms

GbR (civil law partnership)A GbR comes into existence as soon as at least two persons contractually undertake to pursue a common purpose, without a notary, register or minimum capital. All partners are personally liable for its debts, without limit and jointly and severally.GmbH (limited liability company)The GmbH is a corporation and legal entity formed by one or more persons with at least €25,000 share capital. As soon as it is entered in the commercial register, in principle only the company's assets are liable for its debts.Small business (Kleingewerbe)A small business (Kleingewerbe) is a trade that, by its nature or scope, does not require a commercially organised operation and therefore does not have to be entered in the commercial register. It is not the same as the small business VAT exemption.Trade registration (Gewerbeanmeldung)Anyone who starts operating a trade independently must notify the competent authority, usually the municipality's trade office, at the same time. This applies to sole proprietors as well as to the GbR, OHG, KG, GmbH and UG, but not to the liberal professions.UG (haftungsbeschränkt)The UG (haftungsbeschränkt) is not a separate legal form, but a GmbH with less than €25,000 share capital, mathematically from €1, which must be paid in full in cash before the application. In return, it must put a quarter of its annual net profit into a reserve every year.Corporation tax (Körperschaftsteuer)Corporation tax is the tax on the profits of corporations such as the GmbH and UG. Until 2027 it is 15% plus solidarity surcharge, after which it falls gradually to 10% from 2032.

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