You are registered as a Kleinunternehmer (small business owner) but your business is doing very well and you exceed the turnover limit of €25.000? First of all, this is very good news, congrats! 🎉 But what do you actually have to do in this case? We explain how the change from Kleinunternehmer to standard taxation works.
You are automatically considered Subject to VAT when you exceed the turnover limit of €25.000 in a year with revenue from German clients and Private Individuals within the EU.
The change is active starting 1st of January of the next calendar year.
You are also automatically considered Subject to VAT when you exceed the turnover limit of €100.000 within a year with revenue from Germany and EU (no matter what kind of client).
In this case the change is active starting with the invoice you exceed the limit (can also happen during the year).
Make sure you follow up closely on your revenue level, as the Finanzamt may not proactively contact you.
In the app, you need to adjust your account setting to "Subject to VAT" as of January 1st the next year or if you exceeded the 100k limit, from the moment on you reach this limit. Reach out to us if you need help. 💬
In case of doubt or questions, you can always reach out to your local Finanzamt office.
You can register as a Kleinunternehmer if you earn no more than €25,000 in revenue in your first year of self-employment, and don’t exceed €100,000 in the following year. 📊
However, things don’t always go as planned — for example, you might get more orders than expected and exceed this turnover limit. What should you do if that happens?
If you exceed the limit in your first year, you’ll still keep your Kleinunternehmer status for the rest of that year. ✅
But from the second year onwards, you’ll need to switch to standard taxation. This means you are subject to VAT and need to charge and pay VAT.
⚠️ Important: It’s crucial to stay on top of your finances. The Finanzamt (tax office) won’t notify you if you exceed the Kleinunternehmer limit.
So, if you notice your turnover is approaching €25,000, make sure to keep a close eye on it. If you exceed the limit, you’ll be subject to VAT in the following year.
The Finanzamt will then automatically expect you to charge VAT on your invoices.
Be careful: Even if you didn’t realize you exceeded the limit, the Finanzamt will still require you to pay VAT. In the worst case, you could face significant additional payments if you don’t notice in time and fail to start charging VAT on your invoices.
It can also make sense to waive the Kleinunternehmer rule, even though your turnover is below €25,000 (or €100,000 in the following year). For example, if many of your clients are located abroad or you have high business expenses at the beginning.
You don’t need to submit a special application for this change. As soon as you file a VAT return and pay it to the Finanzamt, it counts as an official waiver of the Kleinunternehmer rule.
🔒 However, keep in mind that this waiver commits you for five years. During this period, you can’t switch back to the Kleinunternehmer status, even if your turnover stays below the limit.
Also, remember that the change can only take place at the beginning of the new year. You can’t make the change in the middle of the year.
If you know you’ll be subject to VAT in the next year, you only need to start charging VAT when the new year begins (as long as you haven’t exceeded the €100k limit). Your revenue in the current year remains VAT-free, even for invoices that are paid after the new year starts.
In general, you can switch between the Kleinunternehmer rule and standard taxation whenever needed; you’re not locked into one choice forever. However, remember to keep in mind the five-year commitment if you’ve waived the Kleinunternehmer rule.
Simply go to your settings on web or mobile -> Tax settings.
From this screen, you will be able to change your settings:
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If you'd like to return to Kleinunternehmer status, simply send a quick, informal letter to your Finanzamt. Starting from the next calendar year, you won’t need to charge VAT, as long as your revenue stays below €25,000. If you’d prefer to opt out of the Kleinunternehmer rule, you can notify your Finanzamt with a similar letter. Feel free to use these sample templates to guide you through the process. 👇
Author - Valesca Wilms
As content marketing lead at Accountable Belgium, Valesca writes about freelancing, self-employment, and taxes based on her own experience as a freelancer.
Who is Valesca ?Thank you for your feedback!
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