The small business regulation (Section 19 of the German Value Added Tax Act - UStG) is a simplification regulation for companies with low turnover. This means that the services provided are exempt from VAT. With effect from January 1, 2025, the regulation was revised and, among other things, adapted to European legal requirements.
You can make use of the small business regulation if your total turnover (Section 19 para. 2 UStG) did not exceed €25,000 in the previous calendar year and does not exceed €100,000 in the current calendar year. If the threshold value of € 100,000 is exceeded in the current calendar year, further use of the small business regulation is no longer possible from this point onwards.
The small business regulation means that the sales you carry out are tax-free. In return, you can therefore not claim input tax deduction for purchased services.
By refusing to deduct input tax, the small business regulation can have an unfavorable effect under certain circumstances. The law therefore gives you the option of waiving the small business regulation and opting for taxation in accordance with the general regulations (so-called option for standard taxation, Section 19 (3) UStG). You are bound to the waiver for five calendar years.
Note
If you apply the small business regulation, you may not show VAT separately in your invoices. In the case of low-value invoices (invoices with a total amount not exceeding € 250; Section 33 UStDV), stating the tax rate is considered a separate tax statement.
If you do not comply with this and show the tax separately in invoices or state the tax rate in low-value invoices, this will generally lead to the consequences of Section 14c (2) UStG (unauthorized tax disclosure) and you will owe the VAT. Your invoice recipients cannot deduct the unauthorized tax amounts as input tax.