Are there exceptions to the sales tax liability for small business owners?
May 26, 2023 | 45,00 EUR | answered by Felix Schönecker
Dear tax advisor,
My name is David Gerdes and I have been running a small online trading company for some time now. In the past, I did not pay much attention to the topic of sales tax, as my turnover was relatively low and I was therefore classified as a small business owner. However, my business has grown significantly in the last few months and my turnover has increased.
Now I am thinking about the sales tax obligation and wondering if there are exceptions to the sales tax obligation for small business owners that take into account my current business status. I would like to know if I still qualify as a small business owner or if I am now obligated to pay sales tax.
I am concerned that I may make mistakes in calculating the sales tax and therefore run into legal issues. Therefore, it is very important for me to know whether I am exempt from the sales tax obligation as a small business owner or not.
Can you please help me and explain if there are exceptions to the sales tax obligation for small business owners and if I am considered liable for sales tax in my current business environment?
Thank you in advance for your support.
Sincerely,
David Gerdes
Dear David Gerdes,
Thank you for your question regarding value added tax and the small business exemption. It is understandable that you are concerned about potential legal issues when it comes to invoicing VAT. I will be happy to assist you and explain whether you are exempt from VAT as a small business or not.
In Germany, the small business exemption applies according to § 19 UStG. Under this provision, companies with an annual turnover of up to 22,000 euros (from the year 2020: 22,000 euros) and expected to generate no more than 50,000 euros in turnover in the following year are exempt from VAT. As a small business owner, you are therefore not required to show and pay VAT.
If your turnover has significantly increased in recent months, it is important to check whether you still meet the criteria for the small business exemption. If your turnover exceeds the limit of 22,000 euros or is expected to be over 50,000 euros in the coming year, you will be liable for VAT. In this case, you must show VAT and remit it to the tax office.
It is important to regularly review your turnover figures and, if necessary, submit a VAT return to the tax office. If you are unsure whether you qualify as a small business or are liable for VAT, I recommend contacting a tax advisor. A tax advisor can analyze your turnover figures and assist you in complying with tax regulations.
In conclusion, there are exceptions to the VAT liability for small businesses as long as the turnover thresholds are met. Please regularly review your turnover figures and seek advice from a tax advisor if needed to avoid potential legal issues.
I hope that this information has been helpful to you. If you have any further questions, please do not hesitate to contact me.
Best regards,
Felix Schönecker, Tax Advisor
