Small Business Regulation According to § 19 UStG

With the small business regulation according to § 19 UStG, small businesses canwaive the collection of sales tax, but are then excluded from input tax deduction in return. The small business regulation grants a right to choose which is exercised at the request of the tax office at the beginning of self-employment. Since small business owners are bound by the decision to apply the small business regulation for 5 years, it is important to know the advantages and disadvantages .

Table of contents for small business regulation

1. Principle of the small business regulation

2. Small business regulation as an option

3. Requirements of the small business regulation

4. Legal consequences of the small business regulation

5. Proper invoice from a small business owner

1. Principle of the small business regulation

In principle, small business owners with low sales are treated like non- business owners for reasons of simplification. In detail, this means that small business owners apply the small business regulation according to § 19 UStG are not allowed to charge sales tax ,there is no right to deduct input tax from incoming invoices and therefore no advance sales tax returns are required. There is a separate article on the effects of the small business regulation in practical application .

2. Small business regulation as an option

The small business regulation according to § 19 UStG is an option .

If an entrepreneur waives the application of the exemption from sales tax liability, he is, however , bound to it for five calendar years .

3. Requirements of the small business regulation

The prerequisite for the application of the small business regulation (in the current financial year) is that certain turnover limits are not exceeded. The small business owner must prove to the tax office by means of an annual VAT return that the

Revenue in the previous year was not higher than EUR 17,500.00 and
Sales in the current year will not be higher than EUR 50,000.00 .

4. Legal consequences of the small business regulation

Small business owners are not allowed to include sales tax on their outgoing invoices with the option of the small business regulation . No sales tax rate may be given on invoices for small amounts up to EUR 150.00 . In contrast, the small business owner’s invoice must contain a reference to the application of the small business regulation.

5. Other components of the invoice

In addition, the legal requirements regarding the components of a proper invoice also apply to small business owners , regardless of the application of the small business regulation.

In particular, small business owners must also state their tax number or a sales tax identification number on their invoices, as well as a consecutive invoice number. There is a separate contribution to the legal requirements for proper invoices .

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