German Small Business Regulation 2025: How to Monitor Your Turnover Limits

If you invoice without showing VAT as a small business under § 19 UStG (the German VAT Act), you have had to watch two fixed turnover limits since 2025 – if the higher one is exceeded, standard VAT treatment applies with no transition period.

In brief: The small business regulation (Kleinunternehmerregelung) under § 19 UStG exempts self-employed people and small businesses from VAT as long as prior-year turnover does not exceed 25,000 € and current-year turnover does not exceed 100,000 €. If you cross the 100,000 € limit during the year, you switch immediately – not only in the following year – to standard taxation with a VAT obligation.

Who is affected by the small business regulation?

The regulation affects all self-employed people and businesses that rely on the small business regulation under § 19 UStG and therefore issue invoices without showing VAT. For them, ongoing turnover monitoring is not optional; it is the precondition for the exemption to remain in place at all: anyone who loses sight of the thresholds risks a sudden VAT obligation in the middle of the financial year. This applies equally to freelancers, traders and small GmbHs (German limited liability companies), provided they actually use the regulation. A tool such as Company Audit shows at a glance which of these obligations apply to your company in practice.

Which turnover limits apply since 2025?

Since 01.01.2025, the small business regulation has applied up to a prior-year turnover of 25,000 € and a current-year turnover of 100,000 €. Both limits must be monitored separately: prior-year turnover decides whether the regulation can be used at all at the start of the year, while current turnover decides whether it remains in place during the financial year. Both values should therefore be checked in parallel rather than one after the other, so that neither threshold is exceeded unnoticed.

What do small business owners need to do in practice?

To avoid losing the tax exemption unintentionally, the following steps are needed on an ongoing basis. A simple spreadsheet or an accounting program that continuously displays cumulative annual turnover makes monitoring considerably easier:

1. Check prior-year turnover against the 25,000 € limit and current turnover against the 100,000 € limit.
2. If you are likely to exceed a limit, switch early to standard taxation (showing VAT).
3. Issue invoices without VAT correctly, with a reference to § 19 UStG.
4. Declare a deliberate waiver of the regulation only after weighing up the 5-year commitment.
5. For EU sales, check whether the EU small business scheme (§ 19a UStG) applies.

What happens when the 100,000 € limit is exceeded?

If the 100,000 € limit is exceeded during the current year, you switch to standard taxation immediately – unlike in the past, an annual assessment no longer helps, because exceeding the limit takes effect at once, which is why this mechanism is also called the guillotine (Fallbeil) in practice. From the sale that crosses the limit onwards, VAT must be shown and paid to the tax office (Finanzamt). Invoices already issued without VAT must in this case be corrected or taken into account in later billing, so that no gap arises in the advance VAT return.

What applies if you waive the small business regulation?

A waiver of the small business regulation binds you for five years; if you opt for standard taxation, you therefore cannot switch back at short notice, even if your turnover situation changes again. For anyone planning many investments that carry input VAT, the waiver can still be more favourable, because input VAT from incoming invoices can then be claimed. This weighing-up should therefore take place before the waiver is declared, not afterwards, as it has effects over several financial years.

What applies to sales within the EU?

If you operate across borders within the EU, you must also check whether the EU small business scheme under § 19a UStG applies. It can extend the tax exemption to sales in other EU member states, but it is tied to its own conditions and does not replace checking the national limits under § 19 UStG. Anyone who regularly supplies goods or services across borders should therefore always consider these two regimes together.

What is at stake if you misjudge it?

Misjudgements when checking turnover limits lead to VAT back payments if standard taxation is applied retroactively or late. Ongoing turnover monitoring with a limit check at least once a year is therefore not a formality but the most reliable way to avoid a surprise tax obligation in the middle of the year.

Frequently asked questions

The following answers go deeper into the most important individual questions about small business turnover limits.

Since when has the new 100,000 € limit applied?

The new limit has applied since 01.01.2025. Since then, exceeding the 100,000 € limit takes effect immediately in the current year and not only in the following year.

How often do I need to check my turnover?

A limit check at least once a year is necessary, but in practice ongoing turnover monitoring is advisable so that exceeding the 100,000 € limit does not go unnoticed.

Can I voluntarily waive the small business regulation?

Yes, a waiver is possible, but it then binds you for five years. For anyone planning many investments that carry input VAT, this waiver can be more favourable, because input VAT from incoming invoices can then be deducted.

What happens if I keep invoicing without VAT despite exceeding the limit?

If the turnover limit is exceeded while invoices continue to be issued without showing VAT, VAT back payments are likely, because standard taxation applies from the moment the limit is crossed.

Does the small business regulation also apply to sales in other EU countries?

For cross-border sales within the EU, you must check separately whether the EU small business scheme under § 19a UStG applies – the national limits under § 19 UStG continue to apply independently of it.

Source: § 19 · § 19a UStG. This article is general information and does not replace legal advice in an individual case. As of: July 2026.