Kleinunternehmerregelung: How Small Businesses Invoice Without VAT in Germany

What Is the Kleinunternehmerregelung?

The Kleinunternehmerregelung (small business regulation) under §19 UStG allows German businesses with low turnover to opt out of charging VAT (Umsatzsteuer) on their invoices.

The Kleinunternehmerregelung (small business regulation) under §19 UStG allows German businesses with low turnover to opt out of charging VAT (Umsatzsteuer) on their invoices. This simplifies invoicing and bookkeeping significantly — you don't charge VAT, don't file VAT returns (Umsatzsteuervoranmeldungen), and don't remit VAT to the tax office (Finanzamt).

In exchange, you cannot deduct input VAT (Vorsteuer) on your business purchases. This makes the regulation most beneficial for service-based businesses with minimal business expenses — exactly the profile of most freelancers and solo entrepreneurs.

Who Qualifies?

You can use the Kleinunternehmerregelung if your business meets both conditions:

You can use the Kleinunternehmerregelung if your business meets both conditions:

• Prior year turnover did not exceed €22,000 (gross, including VAT that would have been charged)
• Current year turnover is not expected to exceed €50,000

These thresholds were last updated in 2020 (previously €17,500). If you are starting a new business, the €22,000 threshold is prorated for the first year. For example, if you start in July, your threshold for the first 6 months would be €11,000.

The regulation is optional — even if you qualify, you can choose to charge VAT (opting for "Regelbesteuerung"). However, once you opt for regular VAT, you are bound for 5 calendar years before you can switch back.

How to Invoice as a Kleinunternehmer

Your invoices must include all standard fields required by §14 UStG, except VAT rate and VAT amount.

Your invoices must include all standard fields required by §14 UStG, except VAT rate and VAT amount. Instead, you must include a specific note explaining why no VAT is charged:

"Gemäß §19 UStG wird keine Umsatzsteuer berechnet." (According to §19 UStG, no VAT is charged.)

Alternatively: "Kein Ausweis von Umsatzsteuer, da Kleinunternehmer gemäß §19 UStG."

Your invoice must still include:

• Your full name and address
• Client's full name and address
• Your tax number (Steuernummer) — not your VAT ID (USt-IdNr.), as Kleinunternehmer don't have one
• A unique, sequential invoice number
• The invoice date
• Description of the service or goods
• The gross amount (which equals the net amount since there's no VAT)
• Delivery date or service period

Using invoicing software that supports the Kleinunternehmer setting ensures the §19 UStG note is automatically included and that no VAT calculation appears on your invoices.

Critical Mistakes That Trigger VAT Liability

1. Accidentally Showing VAT on an Invoice

If you display a VAT rate or VAT amount on any invoice — even by mistake — you owe that VAT to the Finanzamt under §14c UStG. The tax office treats the displayed VAT as a valid charge, regardless of your Kleinunternehmer status. This is the most common and most expensive mistake.

2. Exceeding the €22,000 Threshold

If your prior year turnover exceeded €22,000, you automatically lose Kleinunternehmer status for the current year. You must then charge VAT on all invoices from January 1st onward, file VAT returns, and register for a VAT ID.

3. Missing the §19 UStG Note

While omitting the note doesn't automatically create VAT liability, it can lead to confusion with clients (especially businesses that expect to deduct input VAT) and may trigger questions from the Finanzamt during an audit.

4. Issuing Invoices with a VAT ID

Kleinunternehmer should use their Steuernummer, not a USt-IdNr. If you display a VAT ID, clients will expect VAT charges, and the Finanzamt may interpret it as opting for Regelbesteuerung.

Kleinunternehmer and E-Invoicing in 2025

Germany's new e-invoice obligation starting 2025 applies to all businesses — including Kleinunternehmer.

Germany's new e-invoice obligation starting 2025 applies to all businesses — including Kleinunternehmer. This means:

• From 2025, you must be able to receive e-invoices (ZUGFeRD or XRechnung)
• From 2028, you must send e-invoices for domestic B2B transactions
• The Kleinunternehmer exemption from VAT does not exempt you from e-invoicing

Your e-invoices will show €0 VAT with the §19 UStG reference in the structured data. Make sure your invoicing software generates the correct XML representation.

When to Opt Out of Kleinunternehmerregelung

Consider switching to regular VAT (Regelbesteuerung) if:

Consider switching to regular VAT (Regelbesteuerung) if:

• Your business expenses are high (you want to deduct input VAT on equipment, software, office rent)
• Your clients are primarily B2B (they can deduct VAT anyway, so your prices don't seem higher)
• You expect to exceed the threshold soon (better to switch voluntarily than be forced mid-year)
• You want a USt-IdNr. for EU cross-border transactions (Kleinunternehmer cannot participate in the EU VAT system for B2B services)

Kleinunternehmer Invoicing Checklist

Kleinunternehmer Invoicing Checklist includes: Verify your turnover stays below €22,000 (prior year) and €50,000 (current year estimate) Include the §19 UStG note on every invoice

1. Verify your turnover stays below €22,000 (prior year) and €50,000 (current year estimate)
2. Include the §19 UStG note on every invoice
3. Use your Steuernummer — never display a USt-IdNr.
4. Never show a VAT rate or VAT amount — total = net amount
5. Keep sequential invoice numbers for audit readiness
6. Prepare for e-invoice receiving capability by 2025
7. Use compliant invoicing software that supports the Kleinunternehmer mode