Short answer: Under § 19 UStG (German VAT law), the small business exemption (Kleinunternehmerregelung) applies if your total revenue in the previous calendar year did not exceed 25,000 euros and your revenue in the current calendar year does not exceed 100,000 euros. The wording in this version has applied since 1 January 2025 (last updated: November 2026). If the 100,000 euro limit is exceeded during the year, the exemption ends from that point on.
The small business exemption under § 19 UStG frees you from German value added tax (VAT) for as long as your turnover stays small enough. Since 1 January 2025, two limits apply: 25,000 euros in the previous year and 100,000 euros in the current calendar year. This guide explains how to check both figures, what belongs on your invoices and when the exemption ends. For students with freelance assignments or a small side business, it is worth keeping an eye on these numbers early.
Key points at a glance
- Previous year: total turnover must not exceed 25,000 euros.
- Current year: turnover must not exceed 100,000 euros by the end of the calendar year.
- Invoices: you do not show VAT separately.
- Input tax: you cannot deduct it. Opting for standard taxation binds you for five calendar years.
- Income tax: even as a small business owner you pay income tax on your profit.
Which turnover limits apply since 2025?
The law sets two limits that apply side by side. The relevant figure is total turnover, meaning the sum of your taxable supplies calculated on the basis of payments received. Certain tax-exempt supplies and sales of fixed assets are excluded from this calculation. You can read the exact wording of § 19 UStG on gesetze-im-internet.de (in German).
| Check | Limit | Relevant period |
|---|---|---|
| Turnover of the previous year | 25,000 euros | previous calendar year |
| Current turnover | 100,000 euros | current calendar year |
Last updated: November 2026. The basis is the version of § 19 UStG in force since 1 January 2025, as described on the website of the Finanzamt Baden-Württemberg.
How do you check both limits with an example?
Assumption: in 2025 you wrote texts as a freelancer and earned 21,000 euros of turnover based on payments received. In October 2026 you are at 88,000 euros. You keep the previous-year limit because 21,000 euros is below 25,000 euros. For the current year you stay within the rules as long as you remain under 100,000 euros.
If another 15,000 euros come in during November, your current-year turnover reaches 103,000 euros. The limit is then exceeded, and the exemption no longer applies from the point at which it was crossed. Checking the running total before every larger payment prevents this situation.
- Add up all payments received in the previous year and compare the total with 25,000 euros.
- Keep a running total for the current year and check it against 100,000 euros after each larger payment.
- Work with taxable amounts without VAT, because the limits refer to the sum of taxable supplies.
What changes on invoices?
As a small business owner you may not show VAT separately on your invoices. A note about the exemption is common practice. For small invoices up to 250 euros, stating the tax rate already counts as a separate VAT statement. If you show VAT anyway, you owe it under § 14c para. 2 UStG, and the recipient cannot deduct it as input tax. The Finanzamt Baden-Württemberg explains this (in German).
Can a small business owner claim input tax?
No. Input tax deduction is not possible because your supplies are tax-exempt. You therefore cannot claim input tax on the services you buy. If that does not suit you, for example because you invest heavily in equipment, you can opt for standard taxation under § 19 para. 3 UStG. That choice binds you for five calendar years, so it is worth deciding carefully.
What does this mean for students with side jobs?
The exemption applies to entrepreneurs, not employees. Anyone working as an employee in a mini-job does not charge VAT. The situation is different for commissioned work, freelance projects or a trade you run alongside your studies. There you must decide whether the exemption fits, and your turnover determines how long it lasts.
Many students confuse the exemption with general tax freedom. That is a mistake. The rule concerns only VAT. Your profit remains subject to income tax, and you declare it in your tax return. Our guide to the income surplus calculation for side jobs (in German) shows how to record income cleanly.
When does standard taxation make sense?
Standard taxation tends to pay off when your customers are themselves entitled to deduct input tax, for example businesses that can offset the VAT on your invoices. For private end customers, a VAT surcharge works like a price increase. If you mainly invoice private individuals, the exemption is often simpler. The decision therefore depends on your customers, your investments and your turnover.
Which records should you keep?
To check the turnover limits you need verifiable figures on payments received: bank statements, copies of invoices and an overview of incoming payments. Keep these documents in order, so that you can prove the totals if the tax office asks. How long you must keep documents depends on their type. If in doubt, clarify this with your tax adviser or directly with the responsible tax office.
Frequently asked questions
Am I exempt from income tax as a small business owner?
No. The rule concerns VAT. Profits from your self-employed activity remain subject to income tax, and you declare them in your tax return.
What happens if I cross the 100,000 euro limit in December?
The exemption ends from the point of crossing the limit. Turnover before that point remains VAT-free, and afterwards you must charge VAT. The details depend on the individual case, so clarify the billing with your tax office.
May I write “small business owner” on my website?
A note about the exemption is common and harmless, as long as you do not show VAT separately. What matters most is that invoices contain no separate tax amount.
Does the limit apply to mini-jobs as well?
No. The exemption applies to entrepreneurs, not employees. Mini-jobs follow their own rules, such as the earnings limit for marginal employment, which our guide on the 2027 mini-job limit for students (in German) explains.
When do I have to register with the tax office?
Anyone starting a self-employed activity usually notifies the tax office. Which details are asked for is explained in our guide to the questionnaire on tax registration (in German).
What to do now
- Determine your turnover of the previous year based on payments received.
- Set up a list for the current year and check it monthly against the 100,000 euro limit.
- Adjust your invoice template: no separate VAT amount, but all mandatory details.
- Decide in good time whether standard taxation suits you better, because the option binds you for five years.
Related reading
- Founding alongside your studies: funding programmes and advice
- Small business turnover limit exceeded: what now applies
- Applying for a VAT identification number: when freelancers need one (in German)
- Bogus self-employment: how to recognise it in assignments
- Income surplus calculation for side jobs (in German)
Sources: § 19 UStG, small business exemption, gesetze-im-internet.de (in German; last checked November 2026, version in force since 1 January 2025) and Finanzamt Baden-Württemberg, What is the so-called small business exemption? (in German; last checked November 2026).
Last updated: November 2026. This guide is general information, not individual advice.
