Small business VAT exemption

The small business rule (Kleinunternehmerregelung, § 19 UStG) in Germany exempts you from the obligation to charge and pay VAT.

Requirements:

• Turnover in the previous year: under €22,000
• Expected turnover in the current year: under €50,000
• You choose the rule in the tax registration questionnaire

Advantages:

✅ No VAT on invoices (19% less paperwork)
✅ No advance VAT returns (monthly/quarterly)
✅ Simpler bookkeeping
✅ End customers pay net = lower price for them

Disadvantages:

❌ You can't deduct input tax (you don't get back the VAT on YOUR purchases)
❌ With high business expenses (investments, materials), this can be a disadvantage
❌ Business customers sometimes prefer invoices WITH VAT