Small businesses under the VAT scheme on Suchen.Expert
The small business scheme is a special VAT arrangement. Anyone using it remains an entrepreneur in legal terms and does not become a private seller by virtue of the scheme.
If a person acts in the exercise of their commercial or independent professional activity when entering into a legal transaction, they are an entrepreneur within the meaning of § 14 BGB.
This means that small businesses using the scheme must also comply with the statutory requirements applicable to entrepreneurs, particularly when dealing with consumers.
1. What is a small business under the VAT scheme?
Under § 19(1) UStG, the transactions of an entrepreneur established in Germany are generally exempt from VAT if
total turnover in the previous calendar year did not exceed €25,000, and
total turnover in the current calendar year does not exceed €100,000.
The thresholds applicable since 1 January 2025 follow from § 19 UStG.
The small business scheme generally concerns the VAT treatment of transactions. It does not change the fact that a user acting commercially or independently professionally deals with customers as an entrepreneur.
2. Small businesses are not private sellers
A small business must not present itself on Suchen.Expert as a private individual solely because § 19 UStG applies if the goods or services offered are attributable to its commercial or independent professional activity.
§ 14 BGB governs classification as an entrepreneur. What matters is the capacity in which the person acts in the particular legal transaction.
The same consumer protection rules may therefore apply to small businesses as to other entrepreneurs, in particular those concerning:
provider information and legal notices,
pre-contractual information obligations,
price indications,
rights of withdrawal,
statutory rights concerning defects,
data protection,
product safety, and
other sector-specific or product-specific requirements.
The small business scheme does not provide a general exemption from these obligations.
3. VAT for small businesses
Where the conditions of § 19 UStG are met, transactions covered by the small business scheme are exempt from VAT.
Small businesses therefore generally do not show VAT separately on invoices for these transactions.
It is particularly important not to confuse the small business scheme with a general tax exemption for the business. Other tax obligations may continue to exist independently of it.
4. Turnover threshold during the current year
Turnover should be monitored continuously.
If the €100,000 threshold is exceeded in the current calendar year, the very transaction that exceeds the threshold is generally subject to standard taxation. Subsequent relevant transactions must also be treated accordingly. The Federal Ministry of Finance expressly clarifies that the transaction exceeding the threshold is itself no longer tax-exempt under § 19(1) UStG.
An entrepreneur should therefore not wait until year-end to check whether the conditions for the small business scheme still apply.
Special rules apply to entrepreneurs starting their activity during the current calendar year. According to the tax administration, the €25,000 threshold is generally relevant in the year in which activity begins.
5. Invoices issued by small businesses
Small businesses may or must also issue invoices, depending on the business transaction.
§ 34a UStDV sets out special mandatory information for invoices relating to transactions exempt under § 19(1) UStG.
Such an invoice must generally contain at least:
the full name and full address of the supplying entrepreneur and the recipient,
the tax number, VAT identification number or, where applicable, small business identification number,
the date of issue,
the nature and extent of the supply or the quantity and type of goods supplied,
the consideration, and
a statement that the transaction is subject to the small business tax exemption under § 19 UStG.
Additional requirements apply to a self-billing invoice.
Suitable wording may be, for example:
“Tax exemption for small businesses under § 19 UStG.”
A separate VAT amount should not be shown for a transaction exempt under § 19 UStG.
6. E-invoices and small businesses
Special provisions apply to the issuing of invoices by small businesses.
§ 34a UStDV allows an invoice issued by a small business for a transaction exempt under § 19(1) UStG to be transmitted as an “other invoice”, independently of the general e-invoicing requirements.
Receiving e-invoices is a separate matter. Since 1 January 2025, domestic entrepreneurs must generally be able to receive electronic invoices; according to information from the Federal Ministry of Finance, this also applies to small businesses. An email inbox may generally already be sufficient for receipt.
7. Price indications to consumers
Small businesses must also comply with the applicable rules on price indications to consumers.
An entrepreneur offering goods or services to consumers with an indication of price must generally state the total price under § 3 PAngV.
Distance sales offers are subject to additional information obligations concerning price components and freight, delivery, shipping or other costs.
The fact that VAT is not shown separately because of the small business scheme therefore does not remove the obligation to state prices clearly and transparently.
8. Business information and legal notice
Small businesses must also accurately represent their business activity in their provider information.
Where the statutory conditions for a legal notice requirement are met, the corresponding requirements apply regardless of whether the entrepreneur uses the small business scheme under § 19 UStG.
Entrepreneur status on Suchen.Expert should therefore be stated in accordance with the actual commercial or independent professional activity.
9. Changes in the tax situation
If the conditions for the small business scheme change, the entrepreneur should check in particular whether
VAT must be charged in future,
invoices need to be adjusted,
price indications need to be changed,
tax filing obligations arise or change, and
stored business information needs to be updated.
This applies in particular when turnover thresholds are exceeded or when voluntarily switching to standard taxation.
It is possible to waive the small business scheme under § 19 UStG; this generally binds the entrepreneur for at least five calendar years.
Small businesses on Suchen.Expert
Suchen.Expert's basic classification distinguishes between private and entrepreneurial use.
Using the small business scheme under § 19 UStG does not turn a user acting commercially or independently professionally into a private provider.
Small businesses must therefore state their entrepreneur status truthfully and comply with the statutory provisions applicable to their offers.
Suchen.Expert does not assess a user's individual tax classification or decide whether the conditions for the small business scheme are met in a particular case.
If there is uncertainty about the application of § 19 UStG or the tax treatment of individual transactions, a tax assessment should be obtained.
