The small business regulation (Kleinunternehmerregelung) is set out in section 19 of the German VAT Act (UStG, Umsatzsteuergesetz) and exempts small businesses below certain turnover limits from VAT. For students it is relevant when they work self-employed on the side, for example with tutoring, design or web projects. Whether the rule is worthwhile depends on the limits and on your expenses.
Short answer: You are a small business owner under section 19 UStG if your turnover in the previous year was no more than 25,000 euros and you expect it to be no more than 100,000 euros in the current year. You then do not show VAT on your invoices and cannot claim input tax. Last updated: October 2026.
The Most Important Points at a Glance
- The limits are 25,000 euros in the previous year and 100,000 euros in the current year.
- The decisive figure is total turnover, calculated on the fees actually received (vereinnahmte Entgelte), so on the money that has actually come in.
- As a small business owner, you do not show VAT on your invoices.
- You cannot claim input tax on incoming invoices.
- If you want to charge VAT anyway, you must tell the tax office. You are then bound for at least five calendar years.
Which Turnover Counts Toward the Limit?
The decisive figure is total turnover. It is calculated on the fees actually received (vereinnahmte Entgelte), so on the money that has actually changed hands. Turnover from the sale of fixed assets does not count. An invoice you write in December but are only paid for in January counts toward the following year.
| Period | Limit | Decisive rule |
|---|---|---|
| Previous year | 25,000 euros | total turnover must not have exceeded this amount |
| Current year | 100,000 euros | expected total turnover must not be exceeded |
Last updated: October 2026. Source: section 19(1) and (2) UStG.
How Does the Rule Affect Invoices?
As a small business owner, you issue invoices without VAT. Assumption: you charge 400 euros net for a service. At the standard rate of 19 percent (section 12(1) UStG), it would be 476 euros gross. As a small business owner, you bill 400 euros, and your client also pays only that amount. A note on the invoice referring to the small business regulation is common in practice and helps your client with their bookkeeping.
What Does Opting Out of the Rule Mean?
You can opt out of the small business regulation (section 19(3) UStG). The declaration must reach the tax office by the last day of February of the second calendar year following the tax period. Assumption: for the year 2027, the deadline is the end of February 2029. The declaration is irrevocable and binds you for at least five calendar years. A revocation is only possible with effect from the start of a following year. For students with larger purchases, where input tax arises, opting out can be worthwhile. Calculate this in advance, for example using an overview of self-employment while studying.
Frequently Asked Questions
Do I have to register with the tax office?
Yes. If you start working self-employed, you register with the tax office and state that you want to use the small business regulation. The tax office explains the exact process on its website.
Can I claim input tax as a small business owner?
No. Because you do not show VAT, you also cannot claim input tax on incoming invoices. For larger purchases, this is exactly the reason some people choose to opt out of the regulation.
Does the rule apply to my part-time job?
No. An employment relationship is not a business for VAT purposes. The rule only affects your business turnover, for example from freelance assignments.
How does the rule affect income tax?
The small business regulation concerns VAT. Whether and how your profit is subject to income tax depends on your profit and your other income. This also includes whether losses can be carried forward, see Loss Carryforward in Studies.
Related Reading
- Self-Employed While Studying: Business, Tax and Insurance
- Taxes for Students: When You Pay and When You Do Not
- Part-Time Jobs and Taxes for Students in Germany
- Loss Carryforward in Studies: Tax Return Step by Step
Sources: Section 19 VAT Act (UStG, small business regulation), gesetze-im-internet.de, last updated October 2026, Section 12 VAT Act (tax rates), gesetze-im-internet.de, last updated October 2026.
Last updated: October 2026. This guide is general information, not individual advice.
