EMZETT.Small Business Regulation (“Kleinunternehmerregelung”, §19 UStG)
In short: A tax simplification for self-employed people/small businesses in Germany with low turnover — they don’t have to show VAT on invoices and don’t have to file advance VAT returns.
In more detail: Applies up to certain turnover thresholds (which can change, so no specific figure here). Anyone using it also isn’t entitled to deduct input tax (so can’t get back VAT they paid themselves) and usually doesn’t need a VAT ID for everyday invoicing. The alternative is standard taxation, which instead brings full VAT obligations (showing VAT, advance returns).
Our context: Relevant for Emzett’s legal texts (legal notice) as one of the two options as soon as a business is registered — not yet pressing at the moment (no business yet, everything free), but part of the roadmap for the business registration in about 10 months.
In Depth
Not tax/legal advice, but a general classification. The core idea of the regulation is administrative simplification for very small business activities: advance VAT returns and correctly showing VAT on every invoice involve real administrative effort, which at low turnover bears no sensible relation to the amount earned. In return for the simplification, however, the right to deduct input tax also disappears — anyone who buys hardware or software with VAT shown, for example, doesn’t get it refunded, unlike a company under standard taxation.
When the regulation is used, the invoice itself must contain a note that no VAT is shown because of the small business regulation (usual wording: “Gemäß § 19 UStG wird keine Umsatzsteuer berechnet.” — “In accordance with § 19 UStG, no VAT is charged.”) — an easily overlooked but mandatory part of correct invoicing.
Voluntary waiver (opting for standard taxation)
Even those who stay below the turnover threshold can voluntarily waive the small business regulation and opt for standard taxation instead — sensible, for example, if you sell mainly to other businesses (B2B) that are entitled to deduct input tax anyway (so VAT being shown doesn’t matter to them), but you yourself are planning larger purchases with VAT shown and want to use the input tax refund. This waiver is binding for several years and can’t be switched back and forth at will, so it shouldn’t be made lightly.
Effect on your own pricing
An often overlooked effect: small businesses may not SHOW VAT on invoices, but that changes nothing about their own purchase prices — suppliers/providers you buy from still charge VAT completely normally, which the small business bears in full itself without an input tax deduction. For a business model with high purchasing costs (e.g. buying goods, expensive software licences), this can even be economically disadvantageous compared with standard taxation, despite the administrative simplification.
See also: Legal notice requirement (§ 5 TMG)