How does the small business regulation work for value added tax?
December 4, 2022 | 50,00 EUR | answered by Oliver Götzinger
Dear Mr./Ms. Tax Advisor,
My name is Paula Dornbusch and I am a self-employed photographer. I recently registered my business and now I am faced with the question of how the small business regulation for value added tax works. I have heard that as a small business owner, I am exempt from VAT if my annual revenue is below a certain threshold.
My current situation is as follows: I am still in the early stages of my self-employment and I expect that my revenue in the first year will be below the threshold for the small business regulation. However, I am unsure of how exactly this regulation works and what impact it will have on my accounting and tax return.
My concern is that I may be doing something wrong or overlooking important details that could lead to problems with the tax office. Therefore, it would be very helpful for me if you could explain to me how the small business regulation works and what specific steps I need to take to benefit from it. Are there specific requirements that I need to meet? Do I need to make special disclosures on my invoice?
I would greatly appreciate your support and advice on this matter, as I want to do everything correctly to avoid any tax issues. Thank you in advance for your help.
Sincerely,
Paula Dornbusch
Dear Mrs. Dornbusch,
Thank you for your inquiry regarding the small business regulation for value-added tax. I am happy to explain to you in detail how this regulation works and what steps you need to take in order to benefit from it.
As a small business owner according to § 19 UStG, you are exempt from value-added tax if your annual turnover in the previous calendar year did not exceed 22,000 euros and is not expected to exceed 50,000 euros in the current calendar year. If these conditions are met, you cannot show value-added tax on your invoices and therefore do not have to submit value-added tax returns accordingly.
To claim the small business regulation, you must submit a corresponding declaration to the tax office. This declaration can be submitted when registering your business or directly to the tax office. In doing so, you must indicate that you wish to avail yourself of the small business regulation. Please note that you only need to submit this declaration once and it remains valid until you no longer meet the requirements for the small business regulation.
Regarding your invoices as a small business owner, you must provide certain information to comply with legal requirements. This includes, among other things, the note "No value added tax, as small business owner according to § 19 UStG" on your invoices. Additionally, you must provide the tax number or value-added tax identification number, invoice number, date of issue, description of services, invoice amount, as well as your name and address.
I hope this information is helpful and answers your question regarding the small business regulation for value-added tax. If you have any further questions or need assistance, please feel free to contact me.
Best regards,
Oliver Götzinger
Tax consultant
