What is Kleinunternehmerregelung?

The Kleinunternehmerregelung allows small businesses to opt out of the German VAT system. It simplifies accounting significantly — there is no need to charge USt on invoices, no obligation to file periodic Voranmeldungen, and minimal record-keeping for VAT purposes. However, the trade-off is that the Kleinunternehmer cannot reclaim Vorsteuer (input VAT) on business purchases.\n\n**Threshold rules (revised from 2025)**\nFrom 1 January 2025, the thresholds are:\n- Prior year turnover: must not have exceeded €22,000 (previously €22,000; aligned with EU threshold directive)\n- Current year turnover: must not be expected to exceed €50,000\nIf you exceed the current year threshold mid-year, you must switch to standard USt from the following year (not mid-year). If you significantly exceeded the prior year threshold, you cannot use the Regelung in the current year.\n\n**EU cross-border Kleinunternehmer (new from 2025)**\nA major 2025 change allows German Kleinunternehmer to extend their exemption to other EU member states. Previously, making taxable supplies in another EU country triggered registration there. From 2025, if total EU-wide turnover stays below €100,000, German Kleinunternehmer can register for the new EU SME scheme (via the BZSt) and avoid registering in each EU country separately.\n\n**When to opt in vs opt out**\nThe Kleinunternehmerregelung is optional — you can always choose to charge USt even if you qualify. Opting out makes sense when:\n- Customers are mostly B2C (private individuals who cannot reclaim VAT)\n- Purchases are few and VAT-bearing costs are low\n- Simplicity is valued over marginal Vorsteuer recovery\n\nOpting in to standard USt makes sense when:\n- Significant start-up investment with VAT on purchases (equipment, software, services)\n- B2B customers who need a proper USt invoice for their own Vorsteuer claim\n- Business is growing and will exceed the threshold soon\n\n**Mandatory invoice note**\nKleinunternehmer invoices must include the statement: 'Kein Ausweis von Umsatzsteuer, da Kleinunternehmer gemäß §19 UStG' (No VAT shown, as small business under §19 UStG). Failing to include this can cause confusion with business customers.\n\n**Annual filing**\nEven as a Kleinunternehmer, you must file an annual Umsatzsteuererklärung (if registered). The return will show zero tax. This can be waived by the Finanzamt on request if turnover is very low.