Small Business VAT Germany: Kleinunternehmerregelung Explained
The Kleinunternehmerregelung lets small businesses in Germany skip VAT. Learn the thresholds, pros/cons, and how to apply.
How It Works
The Kleinunternehmerregelung (§19 UStG) exempts small businesses from charging VAT if: • Previous year's turnover ≤ €22,000 • Current year's expected turnover ≤ €50,000
You must elect this status when registering your business. It's not automatic.
Pros and Cons
Advantages: • No VAT on invoices (lower prices for B2C) • No monthly/quarterly VAT returns • Simpler bookkeeping
Disadvantages: • Cannot reclaim VAT on purchases • Must include §19 UStG notice on invoices • Once you opt out, you're bound for 5 years • B2B clients may prefer VAT invoices
When to Opt Out
Consider standard VAT registration if: • You have high business expenses (equipment, software) • Most clients are VAT-registered businesses • You're approaching the threshold anyway • You want to signal professionalism
Calculate: if input VAT on expenses > competitive disadvantage of higher prices, opt out.
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