The reform of the small business regulation (Section 19 UStG), which came into force on January 1, 2025, makes it considerably easier to set up a business, but requires daily monitoring of sales limits during ongoing operations.
The infamous pro-rata calculation (“twelfths”) in the founding year is completely eliminated. Even if you start up in December, the full sales limit of €25,000 applies.
✓ Tax free
No proportional reduction despite starting in December. The limit is respected.
You start as a small business owner. Sales remain tax-exempt until the 100k mark is reached.
Standard taxation
Since the previous year (year 2) was over 25k, you are subject to VAT from January 1st.
As soon as you reach the limit of in the current year €100,000 exceed, the tax exemption expires exactly to the second. The bill that breaks this limit must be split or fully taxed.
A new order about €2,000 increases total sales to €101,000. Taxation takes place exactly from 100,000. Euro:
| Performance position | Net | Sales tax | Gross |
|---|---|---|---|
| Proportional service (up to exactly €100,000 annual turnover) | €1,000.00 | 0% (€0.00) | €1,000.00 |
| Prorated service (above the €100,000 limit) | €1,000.00 | 19% (€190.00) | €1,190.00 |
| Total invoice | €2,000.00 | €190.00 | €2,190.00 |
Practical tip: To avoid invoice splitting, the affected invoice can also be shown in full with sales tax.