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Small-business VAT exemption (§ 19 UStG) from 2025

The €25,000 and €100,000 thresholds, what an invoice must say, and how OpenBusinessERP sets up a VAT-exempt small business.

Last checked: Sources listed at the end

Not legal or tax advice. This page summarises public rules and describes what the software does. It does not replace advice from your tax adviser. The linked official sources, in their current version, are what counts.

Small businesses issue invoices without VAT and do not file VAT returns. New limits apply from 2025. This page summarises the rule from the statute text and shows what OpenBusinessERP sets up for you and what it does not.

The limits from 2025

Under § 19 (1) sentence 1 of the German VAT Act (UStG), the turnover of a business established in Germany is exempt from VAT if total turnover did not exceed €25,000 in the previous calendar year and does not exceed €100,000 in the current calendar year. Both conditions must be met at the same time:

PeriodLimitCondition
Previous year€25,000not exceeded
Current year€100,000not exceeded

The relief is a true exemption of the turnover (“ist steuerfrei”). If you exceed €100,000 in the current year, the condition for the exemption is no longer met. From which sale exactly normal taxation applies, and with what consequences, you should clarify with your tax adviser or the tax office. Under § 19 (1) sentence 2 UStG the filing duties of § 18 (1) to (4) UStG do not apply; § 149 (1) sentence 2 AO and § 18 (4a) UStG remain unaffected.

What counts as total turnover

Under § 19 (2) UStG, what counts is the sum of your taxable turnover calculated on the basis of consideration received; sales of fixed assets are disregarded. “Received” means the date the money arrives counts, not the invoice date. Which turnover counts in a specific case, for example tax-exempt foreign sales, is something to settle with your tax adviser.

What the invoice must say

§ 34a UStDV lists these minimum details for invoices on exempt small-business turnover:

  • full name and address of you and of the recipient,
  • your tax number, VAT ID or small-business identification number,
  • date of issue,
  • quantity and usual trade name of the goods, or scope and type of the service,
  • the total amount and a note that the small-business exemption applies,
  • if the recipient or a third party issues the invoice: the word “Gutschrift”.

An example of the note: “Gemäß § 19 UStG wird keine Umsatzsteuer berechnet.” Do not show VAT separately. Whoever shows VAT on an invoice anyway generally owes it under § 14c UStG. The details for normal invoices are in the § 14 UStG checklist.

Opting out

Under § 19 (3) UStG you can declare to the tax office, irrevocably, that you waive the exemption, up to the last day of February of the second calendar year after the tax period. The waiver binds you for at least five calendar years. It usually only pays off if you have high input VAT from purchases and mostly sell to businesses; take the decision together with your tax adviser.

How OpenBusinessERP sets it up

Checked in the source code:

  • Setup wizard: for Germany (and Austria, Switzerland and France, each with its own legal reference) the wizard shows the checkbox “Small business: no VAT on invoices (§ 19 UStG)”. It is off by default.
  • Tax rates: with the box ticked, the wizard replaces the tax rates with a single “Exempt” rate of 0 %, set as default.
  • First invoice: the wizard’s sample invoice gets 0 % on all lines and the tax note “VAT exempt (§ 19 UStG)”. The text is English; for German customers replace it with a German wording as above.
  • Check: the invoice check requires a tax note on 0 % lines, see the mandatory-details checklist.
  • Posting (SKR03, SKR04): if the tax note of a 0 % invoice contains “§ 19 UStG”, “§ 19 Abs. 1 UStG” or “Kleinunternehmer”, OpenBusinessERP posts the revenue to account 8195 (SKR04: 4185) “Erlöse als Kleinunternehmer i.S.d. § 19 Abs. 1 UStG”. With other wording a 0 % invoice goes to the general account for tax-exempt turnover (8100; SKR04: 4100) or, for reverse charge and intra-EU supplies, to their own accounts.

What the software does not do

  • It does not monitor the €25,000 and €100,000 limits and does not warn before you exceed them. Track your turnover yourself, for example with the reports, and discuss it with your tax adviser in good time.
  • It does not decide whether you are a small business. The checkbox is your declaration.
  • Check on every later invoice that the tax note is present: the invoice check only verifies that a note exists on 0 % lines, not its wording.

Sources

  1. § 19 UStG, small businesses (German)
  2. § 34a UStDV, invoices by small businesses (German)
  3. § 14 UStG, issuing invoices (German)
  4. OpenBusinessERP: the setup wizard in the source
  5. OpenBusinessERP: revenue accounts by tax treatment (SKR03, SKR04)