VAT return for a small business in Germany: do I have to file?

Usually not: as a small business owner (Kleinunternehmer) you file no advance or annual VAT return, as long as your total turnover was no more than €25,000 last year and is no more than €100,000 this year. Exceptions exist, for example VAT owed as a service recipient. The trap: an advance return under standard taxation generally counts as a waiver.

Last updated: 27 October 2026

In short

Limits: turnover of no more than €25,000 last year and €100,000 this year; €25,000 in the founding year.
Limit exceeded: From the sale that exceeds the limit onward, standard taxation applies, with advance returns.
Waiver: It binds you for at least five calendar years (§ 19 (3) UStG).

Do I have to file an advance VAT return as a small business owner?

Usually not. The duty to file an advance return is set out in § 18 (1) UStG and applies there expressly subject to § 19 (1) sentence 2 UStG. That sentence provides: if your sales are VAT-exempt under § 19 (1) sentence 1 UStG, the provisions on filing duties (§ 18 (1) to (4) UStG) do not apply. Paragraphs 1 and 2 concern the advance returns, paragraphs 3 and 4 the annual return (§ 18 (4a) sentence 1 UStG). The Finanzamt Hessen sums it up: as a rule, small business owners do not have to submit advance VAT returns or an annual VAT return.

The exemption only concerns VAT (§ 19 UStG). Profit determination and income tax – and, for a trade business (Gewerbebetrieb), trade tax – remain unaffected. More on this: EÜR template: preparing and sending the income surplus statement in ELSTER and Trade tax return in Germany, also for small businesses.

Who is a small business owner? The limits at a glance

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). Total turnover is the sum of the 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). According to the Finanzamt Hessen, the net sales received are what counts – so you do not include the VAT. A forecast of the year's sales is no longer required.

If you founded your business in the current year, your sales are, according to the Finanzamt Hessen, generally VAT-exempt up to €25,000; no forecast is needed in that case either. If the limit is exceeded, the sale that exceeds it is already subject to standard taxation.

Situation	Consequence
Previous year up to €25,000 and current year up to €100,000	Your sales are VAT-exempt (small business scheme).
Previous year over €25,000 (but not over €100,000)	The switch to standard taxation generally takes place at the start of the current year.
Current year over €100,000	The small business scheme ends immediately: the sale that exceeds the limit and all later sales are subject to standard taxation. Earlier VAT-exempt sales remain exempt.
Founding year over €25,000	The sale that exceeds the limit is already subject to standard taxation – and so are all later sales.

When do I still file an advance return?

Two rules remain unaffected by § 19 (1) sentence 2 UStG: § 18 (4a) UStG and the request of the tax office under § 149 (1) sentence 2 AO. The Finanzamt Hessen names these cases in which advance returns and the annual VAT return are required anyway:

Recipient of the service: You owe the VAT as the recipient of the service (§ 13b UStG), for example for services from a business in another EU country (§ 13b (1) UStG).
Intra-Community acquisition: The ELSTER help names intra-Community acquisitions (§ 1 (1) no. 5 UStG) as an example of purchases for which you owe the tax even as a small business owner.
Triangular transaction: You owe the VAT as the last customer in an intra-Community triangular transaction.
Vehicle supplier: You owe the VAT as a vehicle supplier (Fahrzeuglieferer, § 2a UStG).
Request: The tax office asks you to file (§ 149 (1) sentence 2 AO).

For the cases of § 18 (4a) UStG, advance returns only have to be filed for the advance return periods (Voranmeldungszeiträume) in which the tax on these transactions has to be declared (§ 18 (4a) sentence 2 UStG).

What does the waiver mean, and where is the trap?

You can voluntarily waive the small business scheme and switch to standard taxation – for example to claim input VAT (Finanzamt Hessen). You declare the waiver irrevocably to the tax office by the last day of February of the second calendar year following the taxation period; for the calendar year 2025, that means by 28 February 2027. It binds you for at least five calendar years. You can revoke it with effect from the beginning of a subsequent calendar year (§ 19 (3) UStG).

The trap: the waiver can be declared without any particular form. That is why the tax office generally treats the filing of an advance VAT return or annual VAT return under standard taxation as a waiver (Finanzamt Hessen). If you want to remain a small business owner, outside the exceptions you therefore do not file an advance return under the rules of standard taxation.

At founding, you can declare the waiver as early as in the tax registration questionnaire (Fragebogen zur steuerlichen Erfassung) (Finanzamt Hessen); more on this: Applying for a tax number. After the switch you declare the tax in the advance VAT returns and can claim input VAT at the same time. The advance return has to be transmitted by the tenth day after the end of the advance return period (§ 18 (1) sentence 1 UStG); how that works in ELSTER is explained in Submitting the advance VAT return online.

Which mistakes happen often?

Filing an advance return just to be on the safe side. Under standard taxation it generally counts as a waiver and binds you for at least five calendar years.
Calculating the turnover limit wrongly. What counts is the net sales received – without VAT.
Overlooking the previous year. If your total turnover in the previous year was more than €25,000, standard taxation generally applies from the start of the year.
Overlooking the exceptions. If you owe the VAT as the recipient of a service, you file an advance return even as a small business owner.
Ignoring a request from the tax office. Anyone the tax office asks to file must file (§ 149 (1) sentence 2 AO).
Showing VAT on the invoice. As a small business owner you must not show it separately and must refer to the exemption under § 19 (1) UStG (Finanzamt Hessen).

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. If you file an advance return, because you have waived the scheme, exceeded the limit or been asked to file, it takes three steps:

Upload: You upload your Amazon or eBay CSV reports and your invoices. The AI reads amounts, countries and tax rates.
Check: VAT GPT breaks down the VAT for Germany and the EU (OSS) and prepares the advance return, monthly or quarterly. You check and confirm.
Send: With VAT GPT Pro it goes via ELSTER directly to the tax office.

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 about the advance return as a small business

Do I have to file an advance VAT return as a small business owner? Usually not (§ 19 (1) sentence 2 UStG). Exceptions: you owe the VAT, for example, as the recipient of a service, or the tax office asks you to file.

Do I have to file an annual VAT return as a small business owner? Usually not either. The same exceptions apply as for the advance return (§ 18 (4a) sentence 1 UStG; Finanzamt Hessen).

What happens if I exceed the turnover limit? In the current year (€100,000, in the founding year €25,000) the small business scheme ends immediately: from the sale that exceeds the limit, standard taxation applies. If the previous year's turnover was over €25,000, it generally applies from the start of the current year. You then declare the tax in advance VAT returns.

Can I file an advance return voluntarily? Under standard taxation it generally counts as a waiver of the small business scheme – with a binding period of at least five calendar years.

May I show VAT on invoices as a small business owner? No. You must not show it separately and must refer to the exemption under § 19 (1) UStG. You are not entitled to deduct input VAT either (Finanzamt Hessen).

Does the small business scheme also apply in other EU countries? The exemption under § 19 UStG applies in Germany. Since 1 January 2025, businesses can, under certain conditions, also use the small business exemption in the 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), according to the Finanzamt Hessen.