Small business VAT exemption in Germany 2026: what are the turnover limits?

The small business VAT exemption in Germany applies in 2026 if your 2025 turnover (Gesamtumsatz) was at most €25,000 and your 2026 turnover is at most €100,000 (§ 19 (1) UStG); you are then a small business owner (Kleinunternehmer). Both conditions must be met together. Net turnover received counts, and no forecast is needed.

Last updated: 29 October 2026

In short

Two limits: €25,000 in the previous year and €100,000 in the current year, both net.
Founding year: if you founded your business this year, your sales are generally VAT-exempt up to €25,000.
Not counted: sales of fixed assets, for example a machine used in the business (§ 19 (2) UStG).

What is the small business limit in 2026?

A sale is VAT-exempt if total turnover did not exceed €25,000 in the previous calendar year and does not exceed €100,000 in the current calendar year (§ 19 (1) sentence 1 UStG). For 2026 that means, if you were already in business in 2025: your total turnover in 2025 must have been no more than €25,000. Your total turnover in 2026 must be no more than €100,000. If you only founded in 2026, the €25,000 limit applies for 2026 (Finanzamt Hessen; section 19.1 (3) UStAE).

Period	Limit	What it means
Previous year (2025)	no more than €25,000	If exceeded, standard taxation generally applies from the start of 2026.
Current year (2026)	no more than €100,000	If exceeded, the small business scheme ends immediately.

The limits apply since the new wording of 1 January 2025, so also for 2026. They go back to the Annual Tax Act 2024 (Jahressteuergesetz 2024) and new EU requirements (Finanzamt Hessen). The limit applies to turnover, not to profit: what counts is what you received before you deduct costs.

What this means for you: For 2026, compare last year's turnover with €25,000 and this year's with €100,000.

What counts as total turnover?

Total turnover is the sum of your taxable sales, calculated on the basis of consideration received (vereinnahmte Entgelte), less certain VAT-exempt sales. Sales of fixed assets are disregarded (§ 19 (2) UStG). In practice:

Net: according to the Finanzamt Hessen, total turnover is measured by the net sales received. You do not add the VAT.
Received: a payment counts in the year in which you receive it, not in the year in which you write the invoice.
Fixed assets: if you sell, for example, a machine used in your business, that revenue does not count.

A forecast of the expected turnover for a year is no longer required (Finanzamt Hessen).

What this means for you: Count net turnover received, without VAT, and leave out sales of fixed assets.

Example: when are you still a small business owner in 2026?

The Finanzamt Hessen gives an example. A business owner founds the business in 2025 and achieves total turnover of €18,000 that year. In 2026 turnover is €60,000. At the start of 2027 the owner has to switch to standard taxation, because the previous year's turnover of €60,000 exceeded the €25,000 limit. The limit of the current year is then irrelevant.

Applied to you: if you were already in business in 2025 with no more than €25,000 total turnover and stay at no more than €100,000 in 2026, you are a small business owner in 2026. What happens if you exceed a limit is explained in Small business limit exceeded: what now?.

What this means for you: Use the tax office's example to test your own figures against both limits.

What applies in the founding year?

If you founded your business in the current year, you are a small business owner if your total turnover in that year does not exceed €25,000 and you do not waive the scheme. In the founding year your sales are therefore generally VAT-exempt up to €25,000. No forecast is needed here either.

If the limit is exceeded, the sale with which you exceed it is already subject to standard taxation in full. So are all later sales. Sales whose payment you received before stay exempt (Finanzamt Hessen; section 19.7 (1) UStAE).

According to the Finanzamt Hessen, you submit the tax registration questionnaire (Fragebogen zur steuerlichen Erfassung) within one month of founding. How it works: Applying for a tax number.

What this means for you: In the founding year you are exempt up to €25,000, and you file the tax registration questionnaire within one month.

What does the scheme mean in everyday business?

As a small business owner you, as a rule, pay no VAT to the tax office, but you also have no input VAT deduction (Finanzamt Hessen). In everyday business this changes the following:

Invoices: you must not show VAT separately, and you must refer to the exemption under § 19 (1) UStG. Simplified invoices under § 34a UStDV are possible. The required details are in Writing an invoice as a small business owner in Germany.
Advance return and annual return: as a rule you file none. Exceptions apply, for example, if you owe the VAT as the recipient of a service, or if the tax office asks you to file (Finanzamt Hessen). More: VAT return for a small business in Germany.
E-invoices: you do not have to issue them, but you must be able to receive e-invoices from other businesses. An email inbox is enough for that (Finanzamt Hessen).

Did you get an information letter from the tax office about the new small business rules? According to the Finanzamt Hessen, it tells you that you fall under the scheme from the calendar year named, and informs you about the consequences. The cost of registering a small business is covered in Register a small business in Germany: cost.

What this means for you: As a small business owner you pay no VAT but cannot deduct input VAT, and your invoices carry a note instead.

What changed with the new wording from 2025?

New limits: €25,000 in the previous year and €100,000 in the current year (§ 19 (1) UStG).
No more forecast: the decision depends on actual turnover (Finanzamt Hessen).
Immediate end at €100,000: anyone who exceeds €100,000 in the current year switches to standard taxation at once (Finanzamt Hessen).
EU-wide: since 1 January 2025, businesses can, under certain conditions, also use the small business exemption in other EU member states. For that you apply to take part in the reporting procedure of the EU small business scheme at the Federal Central Tax Office (Bundeszentralamt für Steuern, BZSt) (Finanzamt Hessen).

What this means for you: Use the new limits from 2025, and do not rely on a forecast.

Which mistakes happen often?

Counting gross instead of net. VAT is not part of total turnover.
Looking only at the €100,000. If your previous-year turnover was over €25,000, the second limit does not matter.
Counting by invoice date instead of payment received. The consideration received is what counts.
Trusting old figures. Older texts name different limits. Check the date of the source and read § 19 (1) UStG yourself.
Overlooking the founding year. There the €25,000 limit applies to the current year.

What this means for you: Count net, check the €25,000 limit first and count payments received, not invoice dates.

How VAT GPT helps

VAT GPT is the tax software for online sellers, freelancers and small businesses in Germany. It calculates and files in one place, in this order:

your OSS return
VAT
EÜR
trade tax
income tax

The VAT GPT method has three steps:

Upload: You upload your sales reports (for example Amazon or eBay CSV files) and your invoices. The AI reads amounts, countries and tax rates.
Check: VAT GPT calculates your returns from this data and flags invoices with low confidence for manual review. You check and confirm.
Send: With VAT GPT Pro, the VAT returns and the other returns go through ELSTER to the tax office, the OSS return directly to the BZSt.

For small business owners, that means:

Registration: the tax registration questionnaire for sole proprietorships asks whether you apply the small business scheme or waive it.
Invoices: you create invoices as ZUGFeRD or XRechnung. For sales under the small business scheme, VAT GPT adds the note "Gemäß § 19 UStG (Kleinunternehmerregelung) wird keine Umsatzsteuer berechnet."
After the switch: once you are taxed normally, VAT GPT prepares the advance VAT return (monthly or quarterly). With VAT GPT Pro you send it via ELSTER to the tax office.

Try VAT GPT

Frequently asked questions

What is the small business limit in 2026? €25,000 total turnover in the previous year and €100,000 in the current year (§ 19 (1) UStG).

Is the limit gross or net? Net. The net sales received count, without VAT (Finanzamt Hessen).

Does the limit apply to turnover or profit? To turnover. Total turnover is the sum of your taxable sales (§ 19 (2) UStG), not your profit.

Do I have to estimate my 2026 turnover? No. A forecast is no longer required (Finanzamt Hessen).

What applies in the founding year? Your sales are generally VAT-exempt up to €25,000. If the limit is exceeded, the sale with which you exceed it is already subject to standard taxation in full.

Do I have to file an advance VAT return as a small business owner? As a rule, no (Finanzamt Hessen). The exceptions are in the section on everyday business above.

Does the sale of a machine count? No. Sales of fixed assets are disregarded when total turnover is determined (§ 19 (2) UStG).

Can I waive the small business scheme? Yes, voluntarily. The waiver binds you for at least five calendar years (§ 19 (3) UStG). More: Switching from the small business scheme to standard VAT.