Kleinunternehmer

Kleinunternehmer in Germany: the small business VAT exemption (Kleinunternehmerregelung, § 19 UStG) in English

Under the Kleinunternehmerregelung (§ 19 UStG), you charge no VAT in Germany if your turnover was at most €25,000 last year and stays at most €100,000 this year; in your first year the limit is €25,000. In return you cannot reclaim VAT on your own purchases (input VAT, Vorsteuer). It only concerns VAT, so you still owe income tax, and any trade tax, on your profit.

Last reviewed: 2026-11-02

The limits, and how they are counted

Last year: total turnover (Gesamtumsatz) of at most €25,000.
This year: total turnover of at most €100,000. This is no longer a forecast. It is the real figure as money comes in.
First year of business: at most €25,000 in that year, according to the official guide to Anlage EÜR 2025. It is not scaled up to a full year, so a start in November gets the same €25,000 as a start in January.
Counted: the amounts you actually received, not what you invoiced, and since 2025 without adding VAT. Sales of fixed assets do not count (§ 19(2) UStG).
All your activities together count as one business. A Gewerbe and a freelance side line are added up, even with two tax numbers.

It applies to any business, not just to one-person freelancers. A UG or GmbH can use it too, as long as its turnover is low enough.

Should I use it? Two examples

We do not decide this for you. These numbers show what drives the choice.

It often suits: private customers, low costs, little VAT on purchases.
It often does not suit: mostly business customers, a high start-up investment, or a turnover that may soon pass the limits.

Mostly private customers. A language teacher charges private students €20,000 in total. Under the exemption she keeps all €20,000. With VAT at the same price, €3,193 of that would go to the tax office and €16,807 stays. Her private customers cannot reclaim VAT, so the exemption is usually a clear advantage here. (The example ignores any exemption for teaching itself.)

Business customers and large purchases. A photographer invoices companies €20,000 and buys equipment for €5,950, including €950 of VAT. With normal VAT she bills €23,800, passes on €3,800, and gets the €950 back. Her customers do not lose anything, because they reclaim the VAT. Under the exemption, the €950 is simply a cost, and there are no VAT returns to file. So the choice here is €950 against the work of filing.

The five-year lock-in works in one direction

Using the exemption does not lock you in. Giving it up does. You can declare to the tax office that you waive it for a given year, until the last day of February of the second year after that year; for 2026, that is 29 February 2028. The declaration cannot be withdrawn, and the waiver binds you for at least five calendar years. After that, you can revoke it with effect from the start of a later calendar year (§ 19(3) UStG).

A waiver can also happen by accident. According to the chamber of commerce guidance listed below, a VAT advance return or an annual VAT return that applies normal VAT counts as a waiver. Five years means, for example, 2026 to 2030 inclusive, so the earliest return is 1 January 2031, and only if your turnover in 2030 was low enough.

What to write on your invoice

The law asks for a note, not for a fixed sentence (§ 34a UStDV).

German wording often used: „Gemäß § 19 UStG wird keine Umsatzsteuer berechnet.“ This means: No VAT is charged under § 19 UStG.
Wording close to the current rule: „Steuerbefreit nach § 19 UStG (Kleinunternehmerregelung).“ This means: Exempt from VAT under § 19 UStG, small business rule.
On an English invoice: „VAT exempt under § 19 UStG (small business exemption, Germany).“
Must also be on the invoice: your full name and address, the customer's full name and address, your tax number (or VAT ID), the date, what you supplied, and the total amount.
Never show a VAT rate or VAT amount. If you do, you owe that VAT even though you are exempt, and your customer cannot reclaim it (§ 14c(2) UStG).

E-invoices: you may always send a normal paper or PDF invoice under this rule (§ 34a UStDV). You still have to be able to receive e-invoices from suppliers, as the chambers of commerce explain with reference to the Federal Ministry of Finance. See our e-invoice guide.

Foreign clients and suppliers: what surprises people

Selling services to foreign businesses. A service to a business abroad is generally treated as supplied where that business is (§ 3a(2) UStG), so it is outside German VAT. Because the limit counts turnover that is taxable in Germany (steuerbar), it usually does not use up your €25,000. It still counts as income in line 12 of Anlage EÜR, and it is shown again in line 13. Whether a given service falls under this rule depends on the service and customer, so check it for your own case.

No EC Sales List. A small business under § 19 does not file an EC Sales List (Zusammenfassende Meldung) and does not put a VAT ID on these invoices for this purpose (§ 18a(4) and § 19(1) UStG).

Buying from foreign suppliers is where most problems arise. If you buy advertising or software from a business in another EU country, you may owe German VAT on it yourself (reverse charge, § 13b(5) UStG), even under the exemption. If an Irish supplier bills you €1,000, you could owe €190, and you cannot reclaim it. You must then file a VAT advance return for that period, and an annual VAT return for that year (§ 18(4a) UStG). Before you ask for or give out a VAT ID (USt-IdNr.), ask a tax advisor (Steuerberater) to look at your supplier list, because using one can trigger these duties.

Selling to customers in other EU countries under their small business rules needs a separate registration with the Federal Central Tax Office and quarterly reports (§ 19a UStG), with EU-wide turnover of at most €100,000. This is a special case for a tax advisor.

I passed the limit. What changes, and from when?

Which limit you passed decides the date.

Passed €25,000 in a normal year (not your first), and stayed under €100,000: nothing changes this year. From 1 January next year you charge VAT.
Passed €100,000 in the year: VAT applies at once, starting with the payment that takes you over the limit. Earlier payments stay exempt.
Passed €25,000 in your first year: the same immediate rule applies.

A worked example. You start in March 2026. By 14 October you have received €24,300. On 20 October a customer pays €2,000, and your total becomes €26,300. The €2,000 is the first payment under normal VAT. If the invoice showed no VAT, the tax is usually taken out of the amount: €2,000 ÷ 1.19 = €1,680.67 net and €319.33 VAT. Ask the customer whether you can correct the invoice, because a business customer may accept a higher total and reclaim the VAT. From now on, all your invoices show VAT, and you start filing VAT advance returns. In 2027 you also remain outside the exemption, because your 2026 turnover was above €25,000.

What to do in the first week. Stop using the exemption line on invoices. Tell the tax office and start the VAT advance return (Umsatzsteuer-Voranmeldung): the due date is the 10th day after the period ends. In Anlage EÜR, the payment that crossed the limit and everything after it go in lines 15 to 17, not line 12, as the official guide says. Count your turnover from the first day, because the tax office does not warn you. If you do nothing, the VAT is still owed, along with surcharges and interest.

What you still have to do as a Kleinunternehmer

No VAT advance returns, and since tax year 2024 no annual VAT return, unless the tax office asks for it or reverse charge applies (§ 19(1) UStG).
Tax registration questionnaire within one month of starting (§ 138 AO). This is where you state your choice.
Anlage EÜR and your income tax return every year.
Records of what you received and spent, with receipts. In Anlage EÜR your costs go in at the gross amount.

How the software helps, and where it stops

The tax registration interview asks for your expected turnover and flags a contradiction if you choose the exemption while your figures are above a limit. Completing it costs nothing. Sending it costs €35 once, either with your own ELSTER certificate or with a formal check and submission by Jahresabschluss.io. The EÜR module (€99 per workspace per month) keeps your status per year, uses line 12, and warns you if VAT was posted while the exemption is on. It records the five-year waiver as well.

It does not advise you on the choice, as that is individual tax advice (StBerG). It does not check foreign customers' rules, and the invoice wording above is an example, not a legal opinion.

If you are a small freelancer, the EÜR module is more than you need. According to Accountable's site, as of 2 November 2026, its Bookkeeping plan costs €24.90 per month plus VAT and includes a free yearly closing for Kleinunternehmer. According to Norman's site, as of the same date, its Klein plan costs €12 per month excluding VAT, or €9 on yearly billing, and it includes yearly tax declarations on yearly billing. The ELSTER portal is free.

Frequently asked questions

Is the €25,000 limit before or after tax?

Since 2025 you simply add up the payments you received. Under the exemption you do not charge VAT, so there is nothing to add or remove for those amounts. Sales of fixed assets do not count.

I earned €30,000 last year but only €5,000 so far this year. Can I use it?

No. Last year's €25,000 limit decides. You charge VAT for this year, and if this year ends at €25,000 or less, you can return to the exemption next year.

Does Kleinunternehmer mean I pay no tax?

No. It removes VAT only. Your profit is still subject to income tax above the basic tax-free amount of €12,348 for 2026, and to trade tax if you run a Gewerbe and pass the €24,500 allowance.

I'm a freelancer in Germany and all my clients are in the US. Do I need to charge VAT?

Usually not on services to businesses there, because the supply is treated as made abroad, and that is also true without the exemption. The invoice should say so. Keep proof that your customer is a business. It is worth one conversation with a tax advisor, as digital and event services can differ.

Can my UG be a Kleinunternehmer?

Yes, if its turnover is within the limits. The rule depends on turnover, not on legal form. A UG still has to prepare annual financial statements and pay corporate income tax.

Can I write the invoice in English?

Yes. § 14 UStG sets the content, not a language. The tax office may ask for a translation of foreign-language documents (§ 87 AO). Keep the reference to § 19 UStG so the reason is clear.

Primary sources and scope

Authoritative references for the key claims on this page. Check the current text before making a filing or accounting decision.