What Is Kleinunternehmer? Germany's Small-Business VAT Rule Explained
What is Kleinunternehmer status in Germany? The EUR 25,000 and EUR 100,000 limits, how to register with the tax office, three worked examples and when to opt out.
docutools.pro Editorial TeamEditorial TeamKey takeaways
- Since 1 January 2025, sales by a Kleinunternehmer are VAT-exempt under § 19(1) UStG; before, the VAT was simply not collected.
- You qualify with total turnover of at most EUR 25,000 in the previous year and at most EUR 100,000 in the current year.
- In the year you start, the BMF letter of 18 March 2025 applies the EUR 25,000 limit, not EUR 100,000.
- The sale that takes current-year turnover above EUR 100,000 is already subject to standard VAT.
- Opting out under § 19(3) UStG binds you for at least five calendar years.
On this page
A Kleinunternehmer is a small business in Germany that charges no VAT under the small-business rule in Section 19 of the German VAT Act (§ 19 UStG). Since 1 January 2025 you qualify if total turnover stayed at or below EUR 25,000 last year and stays at or below EUR 100,000 this year. In exchange, you cannot reclaim input VAT.
This guide is for English-speaking freelancers, founders and finance teams who meet the term on a German tax form or an invoice. It covers the limits, registration with the tax office, three worked examples and what happens when you leave the scheme. For the invoice wording itself, see our guide to the Kleinunternehmer invoice.
What does Kleinunternehmer mean?
The small-business rule (Kleinunternehmerregelung) is a VAT exemption under § 19 UStG for businesses established in Germany whose total turnover stays within EUR 25,000 (previous year) and EUR 100,000 (current year).
Since the Annual Tax Act 2024 it is a true exemption. Section 19(1) UStG (opens in a new tab) now says the sale is "steuerfrei" (tax-exempt). Until the end of 2024, the VAT was only "not collected". In practice:
- You charge no VAT on your invoices and pay none to the tax office.
- You cannot deduct input VAT (Vorsteuer), because § 15(2) sentence 1 no. 1 UStG (opens in a new tab) excludes it for exempt sales.
- You normally file neither advance VAT returns nor an annual VAT return (§ 19(1) sentence 2 UStG).
- Every invoice needs a note that the § 19 UStG exemption applies.
Legal form does not matter. A sole trader, a GmbH, a partnership or an association can all be a Kleinunternehmer. The glossary entry on Kleinunternehmer gives the short version.
How do the two turnover limits work?
You must meet both conditions at the same time. The previous-year test looks back at actual turnover. The current-year test runs payment by payment.
| Test | Limit | What counts | If you exceed it |
|---|---|---|---|
| Previous year | EUR 25,000 | actual total turnover of last year | no exemption this year, standard VAT from 1 January |
| Current year | EUR 100,000 | total turnover received so far this year | the sale that crosses the limit is already taxable |
| Year of starting | EUR 25,000 | total turnover in the year you start trading | exemption ends once the limit is crossed |
What counts as total turnover?
Under § 19(2) UStG, total turnover (Gesamtumsatz) is the sum of your taxable sales, calculated by payments received. The payment date counts, not the invoice date. These are left out:
- certain exempt sales, for example under § 4 nos. 11 to 29 UStG (many medical and teaching services),
- sales under § 4 no. 8 letters a to h, no. 9 letter a and no. 10 UStG if they are ancillary,
- sales of fixed assets, such as your old company car.
Section 10(1) UStG (opens in a new tab) defines consideration without VAT. As a Kleinunternehmer you charge no VAT, so the full invoice amount counts.
What applies in the year you start?
According to the BMF letter of 18 March 2025 (opens in a new tab) (section 19.1(3) of the VAT Application Decree, UStAE), the EUR 25,000 limit applies in the year you start trading, not EUR 100,000. If you start mid-year, measure every payment against EUR 25,000 from the first month. Our Kleinunternehmer calculator applies this founder limit when you leave the prior-year field empty.
How do you register as a Kleinunternehmer?
There is no separate Kleinunternehmer register. You choose the scheme when you register your business for tax.
- Report the start of your activity. Under § 138 AO (opens in a new tab), freelancers report to the tax office (Finanzamt), trades register with the municipality, which informs the tax office. The deadline is one month after you start.
- Send the tax registration questionnaire (Fragebogen zur steuerlichen Erfassung) electronically through ELSTER, the German tax portal. § 138(1b) AO requires the official electronic data set.
- In the questionnaire, estimate your turnover for the first year and the next year, and state whether you apply the small-business rule.
- Wait for your tax number (Steuernummer). You need it, or a VAT ID, on every invoice under § 34a UStDV.
Foreign-owned businesses note: § 19(1) UStG requires establishment in Germany. A company established in another EU state can only use the German exemption through the EU small-business scheme in § 19(4) UStG, with an EU-wide turnover limit of EUR 100,000 and a small-business identification number from its home state.
Three worked examples
All examples are fictitious and use amounts received.
Example 1: A busy side business
Translator Anna Muster received EUR 21,400 in 2025. In 2026 she receives EUR 38,000.
| Year | Test | Result |
|---|---|---|
| 2026 | previous year EUR 21,400 ≤ 25,000; current year EUR 38,000 ≤ 100,000 | Kleinunternehmer, all 2026 sales exempt |
| 2027 | previous year EUR 38,000 > 25,000 | standard VAT from 1 January 2027 |
This is the most common exit. She never gets near EUR 100,000, but one good year above EUR 25,000 ends the scheme for the next year.
Example 2: Starting mid-year
Muster Webdesign UG starts trading on 1 April 2026 and receives EUR 23,500 by 31 December 2026.
| Year | Test | Result |
|---|---|---|
| 2026 (start year) | EUR 23,500 ≤ 25,000 | Kleinunternehmer |
| 2027 | previous year EUR 23,500 ≤ 25,000; now the EUR 100,000 current-year limit applies | Kleinunternehmer while 2027 receipts stay at or below EUR 100,000 |
Had the company received more than EUR 25,000 in 2026, the exemption would have ended in the start year.
Example 3: One large order crosses EUR 100,000
Carpenter Ben Beispiel had EUR 18,000 total turnover in 2026. By 14 September 2027 he has received EUR 82,000. On 30 September 2027, Beispiel AG pays EUR 25,000 for a shop fit-out.
| Step | Calculation | Result |
|---|---|---|
| Status 14 Sep 2027 | EUR 82,000 | below EUR 100,000, exempt |
| Payment 30 Sep 2027 | EUR 82,000 + 25,000 = 107,000 | this sale is already subject to standard VAT (section 19.1(2) UStAE) |
| Price agreed as a final price | EUR 25,000 ÷ 1.19 | consideration EUR 21,008.40, VAT EUR 3,991.60 |
| Rest of 2027 and 2028 | previous year 2027 > 25,000 | standard VAT |
If Ben already sent an invoice without VAT, he must correct it so it meets § 14(4) UStG. What exceeding the limits means for e-invoicing is covered in our guide to the Kleinunternehmer e-invoice rules.
What obligations remain?
| Obligation | What applies | Legal basis |
|---|---|---|
| Register with the tax office | within one month, electronically via ELSTER | § 138(1), (1b) and (4) AO |
| Invoice | six minimum details, including the § 19 UStG note | § 34a UStDV |
| Receive e-invoices | required for all businesses in Germany since 1 January 2025 | § 14 UStG |
| Issue e-invoices | not required; a paper or PDF invoice is always allowed | § 34a sentence 4 UStDV |
| VAT returns | not required, unless the tax office asks or you owe VAT under § 13b UStG | § 19(1) sentence 2, § 18(4a) UStG |
| Track turnover | compare receipts with EUR 100,000 (start year: EUR 25,000) | § 19(1) UStG |
Section 34a UStDV (opens in a new tab) requires both parties' names and addresses, your tax number or VAT ID, the issue date, the type and quantity of the supply and the amount with the exemption note. If you show VAT on an invoice by mistake, you owe it under § 14c UStG. Our German invoice requirements checker walks you through each item. The full list of details for standard invoices is in our guide to German invoice requirements.
How is it different from related terms?
| Term | Meaning | Relation to the small-business rule |
|---|---|---|
| Standard VAT (Regelbesteuerung) | charge VAT, deduct input VAT, file returns | the alternative; the comparison Kleinunternehmer vs standard VAT weighs both |
| Small-amount invoice (Kleinbetragsrechnung) | invoice up to EUR 250 gross with fewer details (§ 33 UStDV) | an invoice type, not a tax status; Kleinunternehmer may use it |
| Exemption under § 4 UStG | exempts certain kinds of sales, such as medical care | depends on the type of sale, not on turnover |
| EU small-business scheme | exempt sales in other EU states | separate procedure with an EU-wide EUR 100,000 limit |
When does it end, and can you opt out?
It ends automatically when you exceed a limit (examples 1 and 3). You can also opt out, for example if your clients are mostly businesses that reclaim VAT anyway, or if you plan large purchases. The rules in § 19(3) UStG:
- You declare the waiver to the tax office by the last day of February of the second year after the year concerned.
- The waiver is irrevocable and applies from the start of that year.
- It binds you for at least five calendar years.
- After that, you can revoke it from the start of a following calendar year.
Under standard VAT you issue invoices showing VAT, file advance returns and, from 2027 or 2028 depending on turnover, send e-invoices to business clients in Germany. Our guide to Germany e-invoicing 2027 explains that timeline.
How to check your status with docutools.pro
The calculator and the checker run in your browser, so your figures do not leave your computer.
- Open the small-business VAT calculator. Enter last year's turnover under "Actual prior-year revenue (net, €)". In your start year, leave it empty.
- Enter your forecast under "Expected current-year revenue (net, €)" and click "Check now". You see "You qualify as a Kleinunternehmer", "Warning: threshold nearly reached" (from EUR 85,000, in the start year from EUR 21,250) or "Small-business exemption does not apply". "Export result" is part of the Pro plan.
- Before you send your next invoice, open the invoice checker in "Checklist" mode and tick off each required detail. It does not recalculate amounts or rates.
- If a client asks for an e-invoice, the ZUGFeRD invoice generator works without an account. It has no Kleinunternehmer option: under "Items", choose "Exempt" in the "VAT" section and enter the § 19 UStG note in "Reason for VAT exemption". The generator processes the data on our server.
More guides on invoices and tax status are on the invoicing in Germany hub.
Sources
- § 19 UStG (small-business exemption) (opens in a new tab)
- § 15 UStG (input VAT deduction) (opens in a new tab)
- § 34a UStDV (invoices from Kleinunternehmer) (opens in a new tab)
- § 138 AO (reporting a new business) (opens in a new tab)
- BMF letter of 18 March 2025 on the small-business scheme (BStBl I p. 742) (opens in a new tab)
Last reviewed: October 2026
This article is general information, not tax or legal advice.
Tools for this article
- Kleinunternehmer Calculator §19 UStGCheck whether your revenue stays within Germany's 2025 small-business VAT thresholds.Open tool →
- Invoice Mandatory Fields CheckerVerify all mandatory §14 UStG invoice fields via checklist or XRechnung/ZUGFeRD XML.Open tool →
- E-Invoice GeneratorCreate compliant XRechnung XML and ZUGFeRD hybrid PDF invoices instantly.Open tool →
Frequently asked questions
What does Kleinunternehmer mean in English?
Kleinunternehmer translates as small business owner or small entrepreneur. In German tax law it means a business established in Germany that uses the small-business rule (Kleinunternehmerregelung) in Section 19 of the German VAT Act. It charges no VAT, files no regular VAT returns and cannot reclaim input VAT. Status depends on turnover, not on legal form, so freelancers, companies and associations can all qualify.
Do I have to register as a Kleinunternehmer?
There is no separate register, but you must report the start of your business to the tax office within one month under § 138 AO. You send the tax registration questionnaire (Fragebogen zur steuerlichen Erfassung) electronically via ELSTER. In it you estimate your turnover and state whether you want to apply the small-business rule. The tax office then issues your tax number (Steuernummer).
Can a Kleinunternehmer work for clients outside Germany?
Yes. Kleinunternehmer status is about where you are established and how much you earn, not where your clients are. Your invoice to a foreign client still carries no German VAT and needs the § 19 UStG exemption note. Special rules can apply for services you buy from abroad: if you owe VAT as the recipient under § 13b UStG, you must declare it under § 18(4a) UStG.
Is the Kleinunternehmer limit gross or net?
It is based on the consideration received, which by law excludes VAT. Section 19(2) UStG counts total turnover by payments received, and § 10(1) UStG defines consideration (Entgelt) as the amount without VAT. Because a Kleinunternehmer charges no VAT, every euro a client pays counts in full towards the EUR 25,000 and EUR 100,000 limits.