How can I as a small business owner be exempt from sales tax?
November 29, 2023 | 50,00 EUR | answered by Emma Wagner
Dear tax consultant,
I am Jenny Höfer, a small business owner operating a small online business where I sell handmade jewelry. In recent months, my revenue has increased and I am wondering if I can be exempt from sales tax as a small business owner. So far, I have not calculated or displayed any sales tax as my annual turnover is below the threshold of 22,000 euros. Now, I am concerned that I may have incorrectly handled the sales tax and want to ensure that I am doing everything correctly.
My question to you is: How can I be exempt from sales tax as a small business owner and what requirements do I need to meet for this? Should I retrospectively calculate and remit sales tax if I exceed the threshold of 22,000 euros? What are the implications for me and my business if I am exempt from sales tax or if I have to calculate and remit it?
I would greatly appreciate it if you could provide me with a clear answer to my questions and suggest possible solutions to ensure that I fulfill my tax obligations as a small business owner correctly.
Thank you in advance for your help.
Sincerely,
Jenny Höfer
Dear Mrs. Höfer,
Thank you for your inquiry regarding value added tax as a small business owner. I understand your concern and would like to provide you with all the information to ensure that you fulfill your tax obligations correctly.
As a small business owner, you have the option to be exempt from value added tax if your annual turnover in the previous year does not exceed 22,000 euros and is not expected to exceed 50,000 euros in the current year. If you meet these requirements, you can request exemption from value added tax from the tax office. To do this, you must indicate the corresponding note "Small business owner according to § 19 UStG" in your value added tax return.
If you are exempt from value added tax as a small business owner, you are not allowed to indicate value added tax on your invoices and also not submit a value added tax return. However, you are also not able to claim input tax from purchase invoices. If your turnover exceeds the 22,000 euro limit at the end of the year, the small business owner regulation will be retrospectively removed from the beginning of the year. In this case, you must calculate, indicate and pay value added tax from the point of exceeding the limit.
It is important that you regularly review your turnover and, if necessary, cancel the small business owner regulation once you exceed the limit. Incorrect handling of value added tax can lead to additional payments and possible fines. Therefore, I recommend keeping an eye on the development of your turnover and, if necessary, switching to regular taxation in a timely manner.
I hope that this information has been helpful. If you have any further questions, please feel free to contact me.
Yours sincerely,
Emma Wagner
