Kleinunternehmer in 2026: Everything you need to know

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The Kleinunternehmer regulation (small business regulation) continues to offer important tax simplifications for freelancers, sole entrepreneurs, and small businesses in Germany. Since 2025, there have been some key changes you should be aware of.

In this article, we’ll cover:

• What the Kleinunternehmer regulation is

• Key benefits and obligations

• Who qualifies in 2026

• What has changed compared to 2024

What is the Kleinunternehmerregelung (small business regulation)?

The Kleinunternehmerregelung (§ 19 UStG) allows you to avoid charging VAT on your invoices. In return, you also cannot deduct input VAT on your purchases. This rule is especially attractive for freelancers and newly self-employed professionals with modest revenues, as it simplifies bookkeeping and tax compliance.

Advantages of the Kleinunternehmer regulation

• No VAT shown on invoices

• No monthly or quarterly VAT filings

• Simplified accounting

• Less administrative work

• More competitive pricing (especially for private clients, as they don't need to pay VAT then)

Obligations as a Kleinunternehmer

• Include a note like this on all invoices to German clients and EU private individuals:
  “VAT-exempt small business owner according to § 19 UStG”

• Monitor your revenue to stay below the thresholds and check them annually

• Submit an EÜR (profit-loss statement) and Income Tax declaration annually

• If you invoice using a VAT ID and the reverse-charge regime, you must also submit a Zusammenfassende Meldung (ZM) for the quarters in which you had these revenues, plus an annual VAT report (more on this below).

Eligibility criteria in 2026

To qualify as a Kleinunternehmer in 2026, you need to stay within these turnover limits (which will remain the same for the following years):

• Revenue in the previous year (2025): max. €25,000

• Expected revenue in the current year (2026): max. €100,000

• Special rule for the first year (founding year): a hard limit of €25,000

In your founding year, the hard limit is €25,000 in revenue. This means:

• Once you exceed this threshold, you immediately become subject to VAT – usually from the invoice that pushes you over the limit.

• From that point on, you must charge VAT and submit VAT returns.

Example - Founding in 2026:

• You start in January 2026 and earn €20,000 by July.

• In August, you reach €26,000 with issuing a new invoice.
  ➡️ From August 2026, and with this new invoice, VAT must be charged and you become subject to VAT reporting.

Three key scenarios

1. Founding year (hard limit €25,000)

   • If exceeded, you are immediately subject to VAT from the invoice that crosses the threshold.

   • In the following year, the €25,000 limit from the previous year applies again.

2. Exceeding €100,000 in a subsequent year

   • If your actual revenue exceeds €100,000 in the current year, you are immediately subject to VAT from the invoice that crosses the threshold.

   Example:

   • 2025: €18,000 revenue

   • 2026: Revenue reaches €100,000 on August 1 with a new invoice
     ➡️ From August 1, 2026, and with this new invoice, VAT must be charged.

3. Exceeding €25,000 in a subsequent year (but below €100,000)

   • If your revenue exceeds €25,000 but stays below €100,000, you remain VAT-exempt for the current year.

   • You lose your Kleinunternehmer status starting January 1 of the following year and will be subject to VAT from then on.

   Example:

   • 2025: €18,000 revenue

   • 2026: €28,000 revenue
     ➡️ You remain VAT-exempt in 2026, but VAT registration starts on January 1, 2027.

Summary of the thresholds and timing (example):

⚠️ Important to know: If you exceed the revenue limits and no longer qualify for the Kleinunternehmer regulation, but in the following year your revenue falls back below the threshold, you can regain your Kleinunternehmer status in the next year.

However, this does not apply if you voluntarily switched to standard taxation - in that case, you are bound to it for 5 years.

Otherwise, you can decide each year whether you want to take advantage of the Kleinunternehmer regulation again, as long as your revenue stays below the threshold, or if you want to remain under standard taxation.

Invoicing B2B clients for services outside Germany, intra-EU

If you provide services to a business in another EU country and they can provide you with a VAT ID, the place of service moves abroad and the reverse-charge procedure applies. This means your client in their country will handle whether and how much VAT they need to pay.

For the reverse-charge procedure, you will also need a VAT ID if the transactions are not one-time. If you don’t have one yet, you can read here why (and how) you might need to apply for one.

If you’ve invoiced a business in another EU country using your VAT ID and reverse-charge, you will need to submit a Zusammenfassende Meldung (ZM) for the quarter in which the revenue took place. This is unfortunately not yet possible via our platform, but we are working on it. In the meantime, we can assist you with submission via ELSTER or the Federal Central Tax Office portal.

Additionally, an annual VAT report will be required, although Kleinunternehmer have been exempt from this since 2025. This can be easily done via Accountable and will be visible on your taxes page at the end of the year.

🆕 New in 2025: EU small business scheme (EU-KU-Regelung)

Starting in 2025, Kleinunternehmer based in Germany can apply to participate in the new EU small business scheme (EU-KU-Regelung), which allows them to benefit from small business status in other EU member states as well.

To join the scheme, you must submit your application electronically via the online portal of the Federal Central Tax Office (BZSt). During the registration process, you can:

• apply for participation in the EU-KU scheme,

• choose the EU countries where you want to apply the scheme, and

• manage your registration details later on.

🗓️ Your participation becomes valid from the date you are officially registered and approved by the BZSt.

Once registered, you can only manage your participation through the BZSt online portal - including:

• updating your registration data,

• submitting your EU sales reports,

• or opting out of the scheme.

📅 Quarterly EU Kleinunternehmer reporting deadlines

If you’re registered under the EU small business scheme, you must submit a report electronically via the BZSt portal for each calendar quarter - even if you had no taxable sales during that period (a so-called zero report is still required).

The report is due by the end of the month following each calendar quarter:

🔁 Important for deregistration:
If you cancel your participation, the opt-out becomes effective on the first day of the next calendar quarter after your request is submitted.
If you submit your deregistration during the last month of a quarter, it takes effect on the second month of the following quarter.

For now, we don't recommend registering for this, as there are alternatives that may work better. Reach out to our Tax Coaches to learn more.

✅ New: Electronic Invoicing (E-Invoicing) begins rolling out

Starting from 2025, Germany begins its rollout of mandatory e-invoicing in B2B transactions.

What this means for Kleinunternehmer:

• You must be able to receive electronic invoices from other businesses.

• If you send invoices to other businesses, transitional rules apply:

  • You can still use PDFs or paper invoices with customer consent in 2025–2026.

  • Starting in 2028, e-invoicing becomes mandatory for everyone except for Kleinunternehmer

⚠️ Increased scrutiny from tax authorities

With the raised revenue threshold, tax offices are increasingly verifying whether businesses are correctly applying the Kleinunternehmer regulation.

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 ?