Kleinunternehmer
German small-business VAT exemption under § 19 UStG. Businesses below a turnover threshold do not charge VAT, do not file VAT returns, and cannot deduct input VAT.
The Kleinunternehmerregelung (small-business rule) under § 19 of the German Umsatzsteuergesetz allows small businesses to opt out of charging VAT on their sales. A Kleinunternehmer does not collect VAT from customers, does not file VAT returns, and cannot deduct input VAT on their purchases.
Eligibility thresholds
A business qualifies as a Kleinunternehmer if:
- Previous calendar year's turnover did not exceed €25,000 (net).
- Current calendar year's turnover does not exceed €100,000 (net).
These thresholds apply from 1 January 2025 under the Wachstumschancengesetz reform, which raised the previous-year ceiling from €22,000 to €25,000 and the current-year ceiling from €50,000 to €100,000, and shifted both figures from gross to net turnover.
Crossing the current-year €100,000 ceiling immediately ends the Kleinunternehmer status (mid-year, from that transaction onwards). Re-qualification later is possible if turnover falls back below.
Practical effect
A Kleinunternehmer issues invoices without VAT. The invoice must include the legal note "Kein Ausweis von Umsatzsteuer gemäß § 19 UStG" or similar. The customer pays only the net amount and cannot claim input VAT.
For watch dealers operating under Kleinunternehmer status the price you set is the price the customer pays. There is no 19% VAT layer on top.
Trade-off
The Kleinunternehmer regime is attractive for very small operations because it simplifies invoicing and removes VAT obligations. The trade-off is that input VAT on purchases (rent, service costs, equipment, etc.) cannot be deducted. For a typical dealer business, the deductible input VAT often exceeds the savings from not collecting VAT, making the regime unattractive once turnover scales.
Interaction with Differenzbesteuerung
A Kleinunternehmer can technically use Differenzbesteuerung, but the schemes interact awkwardly. Most dealers choose one path: either Kleinunternehmer (sub-€25K previous-year turnover) or full Regelbesteuerung with Differenzbesteuerung where applicable (above the threshold).
Voluntary opt-out
A Kleinunternehmer can voluntarily opt for Regelbesteuerung (the "Verzicht auf die Kleinunternehmerregelung") even if turnover is below the thresholds. This decision is binding for five years. Dealers planning growth typically opt out early to avoid the strategic disadvantage of starting and stopping VAT collection.
Related: differenzbesteuerung, ankaufsrechnung, zugferd.