When is a small business owner (Kleinunternehmer) exempt from charging VAT (Umsatzsteuer) in Germany?
In Germany, if you are a freelancer or small business owner, you can be exempt from charging and paying VAT (Umsatzsteuer) under certain conditions laid down in Section 19 of the German VAT Act (Umsatzsteuergesetz, UStG).
This is known as the Kleinunternehmerregelung (small business regulation).
To qualify as a Kleinunternehmer, two main conditions must be met:
| Condition | Details |
|---|---|
| 1. Turnover in the previous year | Did not exceed €22,000 (including VAT, if any) |
| 2. Turnover in the current year (estimated) | Expected to not exceed €50,000 |
If both conditions are fulfilled, you may apply the:
Kleinunternehmerregelung = small business VAT exemption scheme
The exemption does not apply automatically. You must actively opt in:
when you register for tax for the first time via ELSTER, or
in the “Fragebogen zur steuerlichen Erfassung” (tax registration questionnaire) submitted to the Finanzamt.
Key points:
If you do not choose the Kleinunternehmerregelung at the start,
you will be treated by default under normal VAT rules (Regelbesteuerung).
Once the Finanzamt has accepted your choice:
you no longer charge VAT on your invoices,
but you also cannot deduct input VAT (Vorsteuer) from your business purchases.
Example 1
| Situation | Eligible for Kleinunternehmer status? |
|---|---|
| Turnover in 2024 = €21,000 | Yes |
| Expected turnover in 2025 = €45,000 | Yes |
⇒ The person can still apply the Kleinunternehmerregelung in 2025.
Example 2
| Situation | Eligible for Kleinunternehmer status? |
|---|---|
| Turnover in 2024 = €23,000 | No |
⇒ For 2025, the person will be treated as a regular VAT-registered entrepreneur (Regelbesteuerung):
they must charge VAT, but may also deduct input VAT.
| Aspect | Kleinunternehmer (Section 19 UStG) |
|---|---|
| Add 19 % VAT on invoices? | No |
| Deduct input VAT (Vorsteuer)? | No |
| File regular VAT returns? | Generally not required |
| Special wording on invoices? | Yes, mandatory |
You should include a sentence like this on every invoice:
“Gemäß § 19 UStG wird keine Umsatzsteuer berechnet.”
(“In accordance with Section 19 UStG, no VAT is charged.”)
This makes it clear to both clients and the tax office
that you are operating under the small business VAT exemption.
You lose the Kleinunternehmer status if:
Your actual turnover in a given year exceeds €22,000:
the exemption is withdrawn from the following calendar year onwards.
Your expected turnover in the current year exceeds €50,000:
the Kleinunternehmerregelung may end immediately,
and you will be switched to normal VAT taxation (Regelbesteuerung).
| German term | English explanation |
|---|---|
| Kleinunternehmerregelung | small business VAT exemption scheme |
| Umsatzsteuer | value-added tax (VAT) / sales tax |
| Vorsteuer | input VAT (VAT on purchases that can be deducted) |
| Fragebogen zur steuerlichen Erfassung | tax registration questionnaire |
The editorial team of our website strives to provide accurate information based on careful research and multiple sources. Nevertheless, errors may occur or some details may not be fully confirmed. Please treat the information in this article as an initial guide only and always consult the competent tax office or a professional tax advisor for binding and up-to-date information.
