Do small business owners have to show VAT?
November 6, 2022 | 40,00 EUR | answered by Emma Wagner
Dear tax advisor,
My name is Sophia Hentschel and I am a small business owner. I run an online shop where I sell handmade products. Currently, I am unsure whether I need to charge sales tax as a small business owner.
My revenue is currently below the small business threshold of 22,000 euros per year. However, I am not certain if I still need to charge sales tax. I am afraid that I may be violating legal requirements or even committing tax evasion if I do not correctly charge sales tax.
Could you please explain to me whether small business owners like me need to charge sales tax? Are there any exceptions or special considerations I should be aware of? What are the consequences if I do not correctly charge sales tax?
I would greatly appreciate it if you could assist me with this question. Thank you in advance for your support.
Sincerely,
Sophia Hentschel
Dear Ms. Hentschel,
Thank you for your question regarding the value-added tax as a small business owner. I understand that you are unsure and do not want to risk any legal problems. I would be happy to explain to you the regulations for small businesses regarding the value-added tax.
As a small business owner with a turnover below the threshold of 22,000 euros per year, you have the option to be exempt from the value-added tax. This means that you do not have to show the value-added tax on your invoices and you do not have to submit a value-added tax return. This is regulated in § 19 of the Value Added Tax Act.
However, there are some important points that you should consider as a small business owner. Firstly, you must include the note "No VAT shown in accordance with § 19 UStG" on your invoices to clarify that you are exempt from the value-added tax. Additionally, you are not allowed to claim input tax as you are not charging any value-added tax.
If you inadvertently show value-added tax or submit a value-added tax return, even though you are exempt as a small business owner, this can be considered as tax evasion. In this case, you may face fines and other legal consequences.
It is therefore important that you are clear about whether you want to take advantage of the small business owner regulation or not. If you are unsure, I recommend contacting a tax advisor who can provide you with individual advice.
I hope this information helps you. If you have any further questions, please feel free to contact me.
Best regards,
Emma Wagner
