Kleinunternehmerregelung 2026: Limits and Invoice Wording
Kleinunternehmerregelung in Germany: the €25,000 and €100,000 limits, § 19 UStG invoice wording, pros and cons, e-invoicing rules and a sample invoice.
Quick answer: The Kleinunternehmerregelung (small business rule) under § 19 UStG lets businesses in Germany sell without charging VAT if their net turnover was no more than €25,000 last year and stays under €100,000 this year. Invoices must state that no VAT is charged under § 19 UStG, and input VAT cannot be reclaimed.
For freelancers, side businesses and small traders in Germany, the Kleinunternehmerregelung is often the first tax decision. It saves VAT returns and can make prices more attractive to private customers. It also comes with trade-offs, and the rules changed significantly in 2025, so older articles quoting €22,000 and €50,000 are out of date. This guide explains the current thresholds, how to word invoices, the pros and cons, e-invoicing rules, cross-border sales and the mistakes to avoid. It is general information, not tax advice; consult a Steuerberater or your Finanzamt for your situation.
What is the Kleinunternehmerregelung?
The Kleinunternehmerregelung is a simplified VAT scheme for small businesses set out in § 19 of the German VAT Act (Umsatzsteuergesetz, UStG). Since the reform that took effect on 1 January 2025, eligible small businesses make VAT-exempt supplies. In practice that means:
- You do not charge VAT (Umsatzsteuer) on your invoices.
- You do not pay VAT over to the tax office on your domestic sales.
- You cannot deduct input VAT (Vorsteuer) on your business purchases.
- Your VAT admin is much lighter than for a regular VAT-registered business.
It applies to sole traders, freelancers (Freiberufler) and companies alike, as long as the turnover tests are met. It is a VAT rule only; income tax and trade tax still apply.
What are the Kleinunternehmer limits for 2026?
The Annual Tax Act 2024 changed the limits from 2025, and the same limits apply in 2026:
| Test | Until 2024 | From 2025 |
|---|---|---|
| Previous calendar year turnover | Up to €22,000 (gross) | Up to €25,000 (net) |
| Current calendar year turnover | Expected up to €50,000 (forecast) | Up to €100,000 (net, hard limit) |
| Exceeding the current-year limit | Status kept until year end | Exemption ends with the transaction that exceeds €100,000 |
| First year of business | Forecast up to €22,000 | Up to €25,000 in the founding year |
Turnover here means your total turnover (Gesamtumsatz) excluding VAT, with some exempt supplies left out. Both tests must be met. If last year's turnover was €25,001, you cannot use the rule this year, even if this year will be quieter.
The hard €100,000 limit is the change most people miss. Under the old rules you could finish the year as a Kleinunternehmer once the forecast was made. Now, the sale that takes you over €100,000 and every sale after it are taxed normally, so you must switch to VAT invoices mid-year.
What must a Kleinunternehmer invoice include?
A Kleinunternehmer invoice must not show any VAT rate or VAT amount. Instead, it needs a note that the supply is exempt under the small business rule. Commonly used wordings include:
- "Gemäß § 19 UStG wird keine Umsatzsteuer berechnet."
- "Steuerbefreite Kleinunternehmerleistung gemäß § 19 UStG."
- In English, for international customers: "VAT exempt under the small business scheme, § 19 UStG."
Since 2025, Kleinunternehmer may issue simplified invoices under § 34a UStDV. These must show at least your full name and address, the customer's full name and address, the invoice date, the quantity and type of goods or scope and type of service, the amount payable and the exemption note. Most businesses still include a unique invoice number, the service date and their tax number, because customers and the tax office expect them. Read German invoice requirements for the full list for regular invoices.
Sample Kleinunternehmer invoice
A freelance photographer in Leipzig, using the Kleinunternehmerregelung, invoices a private customer for a family shoot:
| Pos. | Description | Qty | Unit price | Amount |
|---|---|---|---|---|
| 1 | Family photo shoot, 2 hours, 14 September 2026 | 1 | €280.00 | €280.00 |
| 2 | Edited high-resolution images | 20 | €6.00 | €120.00 |
| 3 | Travel within Leipzig | 1 | €25.00 | €25.00 |
| Total amount | €425.00 |
Below the table: "Gemäß § 19 UStG wird keine Umsatzsteuer berechnet." Plus invoice number 2026-041, invoice date 20 September 2026, tax number, bank details (IBAN) and payment terms of 14 days. A regular VAT-registered photographer would have to add 19% VAT (€80.75), making the total €505.75 for the same work. You can reproduce this layout in our free invoice generator by setting the tax rate to 0% and adding the § 19 note.
Is the Kleinunternehmerregelung worth it?
| Advantages | Disadvantages |
|---|---|
| Prices for private customers are up to 19% lower than a VAT-charging competitor, or you keep more margin | No input VAT deduction on equipment, software, rent or vehicles |
| No regular advance VAT returns (Umsatzsteuer-Voranmeldung) | Business customers who reclaim VAT gain nothing from your lower price |
| Simpler invoices and bookkeeping | Mid-year switch to VAT if you pass €100,000 |
| Exempt from issuing e-invoices | Some business clients see it as a sign of a very small operation |
As a rule of thumb, the regulation suits businesses selling mainly to consumers with low purchase costs, such as tutors, therapists, photographers and craftspeople. Businesses selling mainly to VAT-registered companies, or making large investments, often do better opting for regular VAT. You can waive the regulation by notifying the Finanzamt, but the waiver binds you for five calendar years.
How to apply the Kleinunternehmerregelung step by step
- Estimate your turnover for the founding year and check you stay within €25,000, or check last year's actual figure if you already trade.
- Register with the Finanzamt using the tax registration questionnaire (Fragebogen zur steuerlichen Erfassung) in ELSTER, and tick the Kleinunternehmer option.
- Set up your invoice template with the § 19 UStG note and no VAT line.
- Prepare to receive e-invoices from suppliers in XRechnung or ZUGFeRD format.
- Track turnover monthly against the €100,000 current-year limit and next year's €25,000 test.
- Review each December whether you still qualify for the coming year.
Kleinunternehmer and e-invoicing
Germany is phasing in mandatory B2B e-invoicing. Since 1 January 2025 every business must be able to receive e-invoices, and issuing obligations follow in 2027 and 2028 depending on turnover. Kleinunternehmer are exempt from the obligation to issue e-invoices, but must still be able to accept them. See our Germany e-invoicing 2027 guide and the explainer on XRechnung and ZUGFeRD.
Selling to customers outside Germany
Cross-border sales have their own rules. B2B services to businesses in other EU countries are usually covered by the reverse charge, and many Kleinunternehmer apply for a VAT identification number (USt-IdNr.) from the Federal Central Tax Office (BZSt) for this purpose; check your customer's number with a VIES VAT number check. Since 2025, the EU small business scheme also lets German businesses apply VAT exemption in other member states if their EU-wide turnover stays below €100,000, through registration with the BZSt. Compare rates across Europe in our EU VAT rates 2026 table.
Worked example: tracking turnover against the limits
A web designer in Cologne had €23,800 net turnover in 2025, so she qualifies as a Kleinunternehmer for 2026. Her business grows quickly in 2026:
| Period | Turnover in period | Running total 2026 | Status |
|---|---|---|---|
| January to June | €38,000 | €38,000 | Kleinunternehmer |
| July to September | €29,000 | €67,000 | Kleinunternehmer |
| October to November | €30,500 | €97,500 | Kleinunternehmer |
| Invoice of 5 December | €4,000 | €101,500 | Exemption ends with this invoice; 19% VAT applies |
The 5 December invoice takes her above €100,000, so it must be issued with 19% VAT (€760), and so must every later invoice. Because 2026 turnover is well above €25,000, she also cannot use the rule in 2027. If she had tracked the running total monthly, she could have registered for regular VAT in time, discussed prices with clients and avoided correcting invoices afterwards.
Tracking is easiest when every invoice comes from one numbered sequence. A tool such as our invoice number generator keeps numbering consistent, and a simple spreadsheet of invoice dates and amounts gives the running total. Once you switch to regular VAT, your invoices need the full set of details, including the VAT rate and amount, and for EU business customers possibly a reverse charge note. For other countries' small business schemes, compare invoice requirements by country.
Common Kleinunternehmerregelung mistakes
- Showing VAT on the invoice. Under § 14c UStG, VAT shown on an invoice is owed to the tax office even if you are a Kleinunternehmer.
- Using the old limits of €22,000 and €50,000.
- Missing the hard €100,000 limit and continuing to invoice without VAT.
- Forgetting the exemption note, which leaves the customer unsure why there is no VAT.
- Opting out without checking the five-year commitment.
- Not preparing to receive e-invoices from suppliers.
The Kleinunternehmerregelung remains a simple, useful option for small German businesses: stay under €25,000 last year and €100,000 this year, show the § 19 UStG note on every invoice, and never show a VAT amount. Our free invoice generator lets you set VAT to 0% and add the exemption note in the notes field. It needs no sign-up and creates the PDF in your browser.
Frequently asked questions
What are the Kleinunternehmer limits in 2026?
Since 1 January 2025, you can use the Kleinunternehmerregelung if your total turnover was no more than €25,000 in the previous calendar year and does not exceed €100,000 in the current year. The figures are net amounts, without VAT. Both conditions must be met. The rules on these limits apply unchanged in 2026, but confirm with your tax office or adviser if your turnover is near either limit.
What happens if I exceed €100,000 during the year?
Since the 2025 reform, the €100,000 limit is a hard limit. The small business exemption ends with the transaction that takes your current-year turnover above €100,000, and that transaction and every one after it are subject to normal VAT. You then need to issue invoices with VAT, register for regular VAT filing and charge 19% or 7%, depending on the supply.
What must a Kleinunternehmer write on an invoice?
The invoice must show a note that the supply is VAT-exempt under the small business rule, such as Steuerbefreiung nach § 19 UStG or Gemäß § 19 UStG wird keine Umsatzsteuer berechnet. You must not show any VAT amount or rate. Since 2025 a simplified invoice is permitted for small businesses, but it still needs your and the customer's name and address, the date, a description and the amount.
Can a Kleinunternehmer reclaim input VAT?
No. Businesses using the Kleinunternehmerregelung cannot deduct input VAT (Vorsteuer) on their purchases. That is the main trade-off: you charge no VAT, which helps if your customers are consumers, but you bear the VAT on equipment, software and other costs. If you plan large investments, opting for regular VAT may be cheaper overall, though the option binds you for five years.
Do Kleinunternehmer have to issue e-invoices?
No. Small businesses using the Kleinunternehmerregelung are exempt from the obligation to issue e-invoices under the German B2B e-invoicing rollout. However, since 1 January 2025 all businesses in Germany, including Kleinunternehmer, must be able to receive structured e-invoices in formats such as XRechnung or ZUGFeRD from suppliers. A dedicated email inbox and a viewer are usually enough.
Can I use the Kleinunternehmerregelung in the first year?
Yes. In the year you start your business there is no previous-year turnover, so the test is that your expected turnover in the founding year does not exceed €25,000. If it exceeds €25,000, the regulation does not apply from the transaction that crosses the limit. Indicate your choice in the tax registration questionnaire, the Fragebogen zur steuerlichen Erfassung, when you register with the Finanzamt.
Does the Kleinunternehmerregelung affect income tax?
No. It is a VAT rule only. Your profit is still subject to income tax, and possibly trade tax (Gewerbesteuer) if you run a commercial business. You still record income and expenses and usually submit an income statement (EÜR) with your income tax return. Turnover for the Kleinunternehmer limit is not the same as taxable profit.
Can I sell to customers in other EU countries as a Kleinunternehmer?
Yes. B2B services to EU businesses usually fall under the reverse charge, and you may need a VAT identification number for that. Since 2025 there is also an EU small business scheme allowing VAT exemption in other member states if your EU-wide turnover stays under €100,000 and you meet each country's limit, through a special registration with the Federal Central Tax Office.
Invoice Creator Editorial Team
Guides on invoicing, cash flow and small-business finance from Invoice Creator, operated by Next Software Development Company. Content is reviewed for accuracy against the fields our own invoice generator produces.
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