Sales tax, taxation of small businesses

There are significant VAT simplifications for small businesses.

Detailed description

Small businesses benefit from significant VAT simplifications. Their sales are exempt from VAT. Therefore, they generally do not need to submit preliminary VAT returns to the tax office. However, the obligation to submit an annual VAT return remains, but this only applies to years up to and including 2024. For years from 2025 onwards, neither preliminary nor annual VAT returns are required.

 

Information

Prerequisites

A small business owner is a business owner whose total net revenue does not exceed the following limits:

  • No more than 25,000 euros in the past calendar year
  • No more than 100,000 euros in the current calendar year.
  • In the founding year, the only important thing is that the limit of 25,000 euros is not exceeded.
  • The revenue that causes the respective limit to be exceeded is already subject to tax; revenue generated up to that point remains tax-free.

Different total revenue limits applied for years up to and including 2024:

  • 22,000 euros in the past calendar year and
  • 50,000 euros in the current calendar year.

Documents required

No

Please note

A small business owner is not allowed to include sales tax on his invoices. A small business owner cannot claim input tax deduction. However, he can waive the application of the small business regulation by declaring to the tax office and thus opting for standard taxation. The waiver is binding for 5 years.

Deadlines

No

Procedure

  • No separate application is required.
  • The small business regulation applies by law. A separate application is not required. However, when starting a business, information about the expected turnover must be provided in the tax registration questionnaire.

Processing time

No

Fees

No

Legal remedies

No

Legal basis

Section 19 Value Added Tax Act


https://www.gesetze-im-internet.de/ustg_1980/__19.html

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Keywords: VAT exemption value added tax

Last updated: 13.02.2026