German small business rule 2026: what are the turnover limits?

Two limits decide: your total turnover (Gesamtumsatz) must have been at most €25,000 in the previous calendar year and must be at most €100,000 in the current year (§ 19 (1) UStG). Both conditions must be met together. They apply since 1 January 2025, so also for 2026; net turnover received counts, and no forecast is needed.

Last updated: 27 October 2026

In short

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).
EU: from 1 January 2025, under certain conditions, you can also claim the small business exemption in other EU states.

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, and 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 (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 Finanzamt Hessen describes the rule for the period from 1 January 2025 in the same way. The new wording goes back to the Annual Tax Act 2024 (Jahressteuergesetz 2024) and new EU requirements.

What counts as total turnover?

Total turnover is the sum of your taxable sales within the meaning of § 1 (1) no. 1 UStG, 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 to apply the small business scheme (Finanzamt Hessen).

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 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, and 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 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).

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.

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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).

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.

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.