What is Kleinunternehmerregelung (Small Business VAT Exemption)?

The Kleinunternehmerregelung (§6 Abs 1 Z 27 UStG) is the Austrian VAT exemption for small businesses. It is a simplification measure, not a tax advantage in all circumstances — the choice to use it depends on the business's cost structure, client base, and investment plans.\n\n**The €35,000 threshold**\nThe threshold is based on net turnover (excluding any USt that would otherwise apply). As of 2025, this aligns with the EU harmonised SME VAT exemption rules introduced under Directive 2020/285. Businesses that exceed the threshold during the year must register for USt immediately and charge it on all supplies from that point. The first year of exceeding the threshold triggers a one-time tolerance: if turnover exceeds the limit by no more than 15%, the exemption continues for that calendar year.\n\n**Who benefits from staying exempt**\nKleinunternehmer status works best for: (a) B2C businesses whose customers cannot reclaim VAT (private consumers, exempt organisations); (b) service businesses with low input costs (where there is little Vorsteuer to reclaim); and (c) businesses wanting accounting simplicity.\n\n**Who should opt in voluntarily**\nVoluntary USt registration makes sense when: (a) significant capital purchases are planned and the 20% input VAT reclaim is valuable; (b) clients are VAT-registered businesses who need a VAT invoice for their own Vorsteuer claims; (c) the business exports goods or provides cross-border B2B services (which are zero-rated — requiring registration to reclaim input tax).\n\n**The five-year lock-in**\nIf a Kleinunternehmer opts into USt registration voluntarily, they are bound by this choice for a minimum of five calendar years (Bindungsfrist). This prevents businesses from switching back and forth opportunistically. After five years, deregistration is possible by notifying the Finanzamt.\n\n**Cross-border EU supplies**\nFrom 2025, the EU's harmonised SME scheme allows Austrian Kleinunternehmer to supply other EU member states under exemption rules, provided total EU-wide turnover stays below €100,000. This is a significant change for digital businesses and e-commerce sellers.