Kleinunternehmerregelung 2026 Explained: €25,000/€100,000 Limits

You qualify for the small business regulation (Kleinunternehmerregelung) in 2026 if your total turnover was no more than €25,000 in 2025 and does not exceed €100,000 in 2026 (§ 19 Abs. 1 UStG). Amounts are net and counted when the money comes in; in your first year, the limit is €25,000 for the current year. For creators the key point is that only taxable domestic sales count – payouts from foreign platforms usually do not.

What the small business regulation means since 2025

Since 1 January 2025, sales made by small businesses are exempt from VAT. Before that, the tax was simply "not collected". In practice this means: you charge your customers no VAT, pay none to the tax office and, as a rule, file neither VAT prepayment returns nor an annual VAT return. § 19 Abs. 1 Satz 2 UStG expressly switches off these filing duties.

The price: you cannot deduct input VAT. Input VAT (Vorsteuer) is the VAT other businesses charge you, for example on a camera, a laptop or software. As a small business, that VAT is simply part of your costs.

The regulation applies automatically. You do not have to apply for it; you indicate it in the tax registration questionnaire when you start (see registering as a self-employed creator). If you do not want it, you opt out (see below). Whether opting out pays off is compared in detail in small business or regular VAT (in German).

The 2026 limits at a glance

For comparison: until the end of 2024 the limits were €22,000 (gross) in the previous year and a forecast of €50,000 for the current year. Today's limits are net, and the upper limit is no longer an estimate but a hard line. The tax administration explains the new rules in a letter of the Federal Ministry of Finance dated 18 March 2025 (III C 3 - S 7360/00027/044/105).

What counts towards the limit – and what does not

Total turnover (Gesamtumsatz) under § 19 Abs. 2 UStG is the sum of your taxable sales in Germany, calculated on the amounts received. What counts is when the money arrives, not when you send the invoice. Advance payments count in the month you receive them.

These count:

• brand deals with German companies and agencies

• tips and donations sent directly by fans in Germany (for example via PayPal)

• digital products or merch sold to private customers in Germany

• all other domestic sales, even from unrelated activities – a business owner has only one business for VAT

These do not count:

• payouts from platforms based abroad, for example ad revenue from a Google company in Ireland or payouts from a US platform, because your service to the platform is supplied abroad (§ 3a Abs. 2 UStG)

• brand deals with companies in other countries

• sales of fixed assets, such as your old camera (§ 19 Abs. 2 Satz 2 UStG)

So a creator can earn far more than €25,000 a year and still be a small business. The reasoning behind the platform rule is explained in VAT for creators in Germany; for AdSense specifically see YouTube income and taxes.

The cliff edge: crossing a limit

The upper limit works like a cliff edge (Fallbeil). The sale with which you cross the limit is already fully taxable – not just the part above the limit. Earlier sales in the year stay exempt, later ones are taxed normally. The following year you cannot use the regulation, because last year's turnover exceeded €25,000.

Worked example: first year

In the first year there is no previous year. The €25,000 limit then applies to the current year, as the Hessian tax administration's influencer guide also states.

Example: a creator registers her business on 1 April 2026. By the end of August she receives €21,500 from German brands. In September an agency in Germany pays €6,000 for a campaign. Her YouTube payouts from Ireland are not included because they do not count.

As the agency is a business and can deduct input VAT, it is often possible to agree a corrected invoice of €6,000 plus €1,140 VAT. Whether that works depends on your contract.

Worked example: crossing €100,000

Example: a creator had €22,000 of domestic turnover in 2025. By the end of September 2026 he has received €90,000 from German brands, plus €40,000 from platforms abroad. In October a German brand pays a fixed €15,000.

From the deal that crosses the limit, you must charge VAT, file prepayment returns and issue full invoices under § 14 UStG. Watch your running total during the year, not only at year end.

Invoices, returns and e-invoices

Invoices

Small businesses may issue simplified invoices under § 34a UStDV. They must contain:

• full name and address of you and your customer

• your tax number (Steuernummer), VAT ID or small business ID

• the date of issue

• quantity and type of goods, or type and scope of the service

• the total amount and a note that the small business exemption applies

• the word "Gutschrift" if the customer issues the invoice (self-billing)

The law prescribes no wording. Common in Germany is "Steuerfrei nach § 19 UStG (Kleinunternehmerregelung)"; on an English invoice you can add "VAT exempt – small business regulation, § 19 UStG". If you show VAT by mistake, you owe that amount (§ 14c UStG), and your customer cannot deduct it.

Returns

As a small business you file no VAT prepayment returns and no annual VAT return as a rule. The exception is § 18 Abs. 4a UStG: if you owe VAT as the recipient of a service, for example under reverse charge, you must file returns for those periods. The tax office can also request a return.

E-invoices

Since 1 January 2025, small businesses must also be able to receive e-invoices; an email inbox is enough. You never have to issue them: under § 34a UStDV your invoices may always be sent as an ordinary invoice, on paper or as a PDF.

Opting out (Verzicht)

You can waive the regulation and pay VAT under the normal rules (§ 19 Abs. 3 UStG). This can make sense if most of your customers are businesses that reclaim VAT anyway, or if you plan large investments.

• Form: a declaration to the tax office. A VAT return in which you calculate VAT normally generally also counts as opting out.

• Deadline: until the last day of February of the second following year. For 2026 that is 29 February 2028. The waiver applies from the start of the year.

• Commitment: at least five calendar years. After that you can revoke it only from the start of a calendar year.

• Input VAT before the switch: According to a letter of the Federal Ministry of Finance of 10 November 2025, input VAT on services received while you were still a small business can generally no longer be deducted after the switch – including advance payment invoices. A partial correction under § 15a UStG may be possible. Make large purchases only after you have decided.

Special cases

• Reverse charge on purchases: If you buy ads from Meta or Google, software or agency services from companies abroad, you owe the German VAT under § 13b UStG – small business or not. Example: €1,000 of ads from an Irish company means €190 VAT, which you pay and cannot deduct. A VAT return is due for that period.

• EU small business scheme (§ 19a UStG): Since 2025 you can also use the exemption in other EU countries. Conditions include EU-wide turnover of at most €100,000, the limit of the other country, a small business ID from the Federal Central Tax Office and quarterly reports within one month after each quarter (§ 19a UStG).

• Several activities: Sales from, say, freelance photography and from social media are added together, because one person has only one business for VAT.

• VAT ID: Small businesses can get a USt-IdNr. on application. Foreign platforms and ad networks often ask for it. Small businesses do not file an EC Sales List (§ 18a Abs. 4 UStG).

Common mistakes

• Counting foreign platform payouts: Many creators believe they are over €25,000 and give up the exemption without need – and are then bound for five years.

• Working with a forecast: Until 2024 the expected turnover mattered. Today only actual receipts count, so check your total during the year.

• Overlooking advance payments: They count in the month you receive them and can push you over the limit earlier.

• Planning with €100,000 in your first year: In the first year the limit is €25,000.

• Showing VAT on an invoice: Even a mistaken VAT line is owed.

• Missing the exemption note: Without it the invoice is incomplete.

• Ignoring reverse charge: Ads from Meta or Google trigger VAT and a return even for small businesses.

• Investing first, switching later: Since the letter of 10 November 2025, a later switch no longer brings back the input VAT on earlier purchases.

How the small business regulation fits with income tax and trade tax is shown in taxes for content creators in Germany.