The small business regulation (§ 19 UStG) is a statutory simplification regulation for companies with low turnover. This means that VAT is not charged. You can make use of the small business regulation if your total turnover (§ 19 Para. 3 UStG) did not exceed € 22,000 in the previous calendar year and is not expected to exceed € 50,000 in the current calendar year.
If you start your business activity during the course of the calendar year, the turnover limit of € 22,000 applies for the application of the small business regulation. In this case, you must estimate the expected turnover for the start-up year as part of a forecast. To check whether the limit of € 22,000 is likely to be met in the year of foundation and thus whether the small business regulation can be applied, the estimated total turnover must be extrapolated to the full calendar year.
Example:
The business activity commences on May 10. For the period from May 10 to December 31, you expect gross revenue (i.e. including VAT) of €12,000.
When checking whether the small business regulation can be claimed, you must extrapolate the estimated turnover of € 12,000 for the months of May to December to a total annual turnover. In this case, this amounts to €18,000 and is calculated as follows: 12.€ 000 / 8 months (May to December) x 12 months. As the limit of € 22,000 is not exceeded in the opening year, you can apply the small business regulation.
Variation:
Example as above. However, you calculate a total turnover of € 20,000 in the year of foundation. As the total turnover extrapolated to the calendar year is € 30,000 (€ 20,000 / 8 months (May to December) x 12 months) and exceeds the relevant amount limit of € 22,000, the requirements for applying the small business regulation are not met
The small business regulation means that no VAT is levied on the sales you make. However, due to the fact that VAT is not charged, you cannot claim an 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 according to the general regulations (so-called option for standard taxation, § 19 Para. 2 UStG). If you waive the application of the small business regulation, you must pay tax on your turnover regardless of the amount, but you will receive the input tax deduction under the further conditions of § 15 UStG. You are bound by the waiver for 5 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 observe 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.