Tax software for small businesses in Germany: what you really need

In short

• Switch: The program should handle the switch to standard taxation if you exceed the limits or waive the scheme.
• Trap: A standard-taxation advance return generally counts as a waiver, binding at least five calendar years (§ 19 (3) UStG).
• Free works too: Mein ELSTER is free according to ELSTER; a program pays off with many receipts.

Which returns remain for small business owners?

The small business scheme concerns VAT only (§ 19 UStG). Income tax and, for a trade business, trade tax remain. The overview:

Whether you are a freelancer or run a trade decides about trade tax: it affects only a trade business (§ 2 (1) GewStG). The distinction and more on the returns of the self-employed are in Tax software for the self-employed in Germany: what matters; trade tax is explained in Trade tax return in Germany, also for small businesses.

What must tax software for small businesses be able to do?

These points decide whether a program fits you, without naming any:

• Send the EÜR and income tax return: Both are to be transmitted electronically in the officially prescribed data format (§ 60 (4) EStDV, § 25 (4) EStG). A program that only produces a PDF is not enough; the tax office waives electronic transmission only on request, to avoid undue hardship.
• Trade tax return for a trade business: It too is to be transmitted electronically (§ 14a GewStG).
• Figures instead of retyping: The more invoices and marketplace reports you have, the more an import helps.
• The switch to standard taxation: If the small business scheme ends or you waive it, you transmit the advance return electronically by the tenth day after the end of the advance return period (§ 18 (1) UStG). Ask whether you can add this function when needed instead of paying for it from the start.
• E-invoices: You do not have to issue them, but you must be able to receive them; according to the Finanzamt Hessen an email inbox is enough.
• The price for sending: Some programs only calculate, others also send. Ask for the price of exactly the returns you file.

Mein ELSTER or a program?

Mein ELSTER is the tax administration's portal. According to ELSTER it is free, needs no download or installation and works on tablet and smartphone too. With few receipts it can be enough: you fill in the forms yourself. A program pays off when you have many invoices or marketplace reports or prepare several returns from the same figures. The comparison is in ELSTER alternative for online sellers: Mein ELSTER or software?. If you are just starting out, you first need a tax number: Tax number in Germany: applying with the tax registration questionnaire online.

What applies when the small business scheme ends?

Then your program also needs VAT. That happens in two ways:

• You exceed the limit. If you pass €100,000 in the current year (€25,000 in the founding year), the scheme ends immediately: the sale that exceeds the limit and all later sales are subject to standard taxation; earlier VAT-exempt sales stay exempt. If your total turnover in the previous year was over €25,000 but not over €100,000, you switch in principle at the start of the current year (Finanzamt Hessen). What counts is the net sales received, without VAT; a forecast is no longer needed.
• You waive voluntarily, for example to claim input VAT. You declare the waiver to the tax office irrevocably, by the last day of February of the second calendar year following the taxation period at the latest; it binds you for at least five calendar years (§ 19 (3) UStG).

After the switch you declare the tax in advance VAT returns and can claim input VAT at the same time. As a small business owner, by contrast, you are not entitled to deduct input VAT (Finanzamt Hessen). Limits, exceptions and the waiver trap in detail: VAT return for a small business in Germany: do I have to file?

Which mistakes come up most often?

• Choosing a program for VAT functions you do not need. While you are a small business owner, the advance and annual VAT returns as a rule do not apply.
• Filing an advance return "to be safe". Under standard taxation the tax office generally treats it as a waiver (Finanzamt Hessen); it binds you for at least five calendar years (§ 19 (3) UStG).
• Showing VAT on the invoice. As a small business owner you must not show it separately and must refer to § 19 (1) UStG (Finanzamt Hessen). Anyone who shows it anyway owes the amount shown (§ 14c (2) UStG).
• Checking the €100,000 limit only at year end. It takes effect immediately in the current year, from the sale that exceeds it.
• Only printing the EÜR and income tax return. Both are to be transmitted electronically.
• Forgetting the trade tax return. If you run a trade, it is due, among other cases, if trade income exceeds €24,500 (§ 25 (1) GewStDV).

How VAT GPT helps

Are you just starting out? In the tax registration questionnaire for sole proprietorships, you choose in VAT GPT whether you apply the small business scheme or waive it. You fill in the questionnaire free of charge in the app and send it to the tax office. For your returns you work in three steps:

1. Upload: You upload your invoices and your Amazon or eBay CSV reports. The AI reads amounts, countries and tax rates.
2. Check: You check and confirm the values and create your EÜR, trade tax and income tax returns in the same account.
3. Send: With VAT GPT Pro, everything goes via ELSTER to the tax office.

Everything is in one place: EÜR, trade tax and income tax returns, and, if you switch to standard taxation, the advance VAT return and the annual VAT return. There is Free (basic features, free of charge), Go (30 days free with all Pro features) and Pro (€49 per month or €444 per year, each including VAT). Try for Free Now

Frequently asked questions

Do I need tax software as a small business owner? Not necessarily. Mein ELSTER is free according to ELSTER, and you fill in the forms yourself. A program pays off if you have many receipts. What matters is the route: the income tax return and the EÜR go to the tax office electronically (§ 25 (4) EStG, § 60 (4) EStDV).

Must I file a tax return as a small business owner? As a rule yes: the income tax return (§ 25 (3) EStG). Advance VAT returns and an annual VAT return are as a rule dropped (§ 19 (1) sentence 2 UStG).

Must I prepare an EÜR as a small business owner? If you determine profit as the surplus of business income over business expenses (§ 4 (3) EStG), you transmit the EÜR electronically (§ 60 (4) EStDV). Anyone legally obliged to keep books cannot use the EÜR.

Which limits apply to small business owners? Total turnover of no more than €25,000 in the previous year and no more than €100,000 in the current year (§ 19 (1) sentence 1 UStG); €25,000 in the founding year (Finanzamt Hessen). What counts is the net sales received.

Do I have to pay trade tax as a small business owner? Trade tax affects only a trade business (§ 2 (1) GewStG), so as a rule not if you are a freelancer. A trade tax return is due, among other cases, if the trade income exceeds €24,500 (§ 25 (1) GewStDV).

Is there free tax software for small business owners? Yes: Mein ELSTER is free according to ELSTER. The tax registration questionnaire is free of charge.

Further reading

• VAT return for a small business in Germany: do I have to file?
• Trade tax return in Germany, also for small businesses
• EÜR template: preparing and sending the income surplus statement in ELSTER
• Tax number in Germany: applying with the tax registration questionnaire online
• ELSTER alternative for online sellers: Mein ELSTER or software?
• Tax software for the self-employed in Germany: what matters

Not tax advice: the content does not replace individual advice.

Sources

• § 19 UStG (in German)
• § 18 UStG (in German)
• § 14c UStG (in German)
• § 25 EStG (in German)
• § 4 EStG (in German)
• § 60 EStDV (in German)
• § 2 GewStG (in German)
• § 14a GewStG (in German)
• § 25 GewStDV (in German)
• Finanzamt Hessen: small business owners – new rules from 2025 (in German)
• ELSTER: start page with Mein ELSTER (in German)