Wegweiser Tradespeople · Law and business in the skilled trades Deutsch

📊 Taxes and the small business scheme

Small business limits of 25,000 and 100,000 euros, trade tax allowance of 24,500 euros and the reverse charge for construction services.

small business (Kleinunternehmer) § 19 UStG trade tax VAT § 13b UStG reverse charge tax allowance

In brief

The most important taxes in the trades: income tax, VAT and trade tax.

  • Small business (Kleinunternehmer): You pay no VAT if your turnover in the previous year was at most 25,000 euros and in the current year is at most 100,000 euros.
  • Opting out: You can waive the scheme. The declaration is irrevocable and binds you for five calendar years.
  • Trade tax: Sole proprietorships and partnerships have an allowance of 24,500 euros.
  • Construction withholding tax: Private clients are exempt. Businesses as clients must withhold 15 percent on construction services, unless you present an exemption certificate.
  • Construction services: For orders from other construction businesses, the client often owes the VAT.

Get help from a tax adviser.

Step by step

  1. Estimate your turnoverEstimate your turnover for the first year and check the limits for small businesses.
  2. DecideSmall business without VAT or standard taxation with input tax deduction: both have advantages and disadvantages.
  3. Check construction servicesFor orders from construction businesses, find out whether the tax liability passes to the client.
  4. Keep trade tax in viewCheck whether your trade income exceeds the allowance.

Deadlines

25,000 euros / 100,000 euros
Turnover limits: previous year at most 25,000 euros, current year at most 100,000 euros.§ 19 Abs. 1 UStG
5 calendar years
Binding period after opting out of the small business scheme; afterwards revocation with effect from the start of a following year is possible.§ 19 Abs. 3 UStG
24,500 euros
Allowance on trade income of natural persons and partnerships.§ 11 Abs. 1 GewStG
3.5 %
Tax base rate on trade income.§ 11 Abs. 2 GewStG
last day of February of the second following year
Latest date for submitting the opt-out declaration or revocation to the tax office.§ 19 Abs. 3 UStG
15 %
Withholding on construction services to businesses; no duty to withhold with an exemption certificate or if the consideration in the calendar year is not expected to exceed 5,000 euros (15,000 euros if the client carries out only VAT-exempt rental transactions).§ 48 EStG; exemption certificate § 48b EStG
Watch out – common mistakes
  • As a small business owner you may not show VAT on invoices and have no input tax deduction.
  • If the 100,000-euro limit is exceeded in the current year, the exemption lapses. Monitor your turnover continuously.
  • The opt-out declaration is irrevocable (§ 19 Abs. 3 UStG) and binds you for five calendar years; afterwards revocation is possible with effect from the start of a following year. Declaration and revocation are possible until the last day of February of the second following year.
  • Construction withholding tax (§ 48 EStG): as a client (business) you withhold 15 percent of the consideration on construction services and pay it to the tax office. Ask your contractors for the exemption certificate under § 48b EStG.
In depth · legal basis, figures and practice – for advisers and professionals

Small business scheme

§ 19 Abs. 1 UStG: transactions are tax-exempt if total turnover in the previous calendar year did not exceed 25,000 euros and total turnover in the current calendar year does not exceed 100,000 euros. A business owner can irrevocably waive the tax exemption; the waiver binds for five calendar years and can afterwards be revoked only with effect from the start of a following year (§ 19 Abs. 3 UStG). Waiver declaration and revocation are possible until the last day of February of the second following year.

Construction services and liability for tax

Under § 13b Abs. 2 Nr. 4 UStG, construction services are subject to the recipient's liability for the tax. Under para. 5, the recipient owes the tax if they are a business that itself regularly provides construction services. This is presumed if the tax office has issued a certificate that is valid for at most three years. In this case the invoice contains no VAT. The details (notice of the recipient's liability for tax on the invoice) were not checked.

Construction withholding tax

§ 48 EStG: if someone performs a construction service in Germany for a business or a public-law legal entity, the recipient must withhold 15 percent of the consideration and pay it over. The withholding does not apply if an exemption certificate under § 48b EStG exists or the consideration in the current calendar year is not expected to exceed 5,000 euros. The limit is 15,000 euros if the recipient carries out only VAT-exempt rental transactions (§ 48 Abs. 2 EStG).

Trade tax

For natural persons and partnerships, trade income is reduced by an allowance of 24,500 euros (§ 11 Abs. 1 Nr. 1 GewStG). The tax base rate is 3.5 percent (§ 11 Abs. 2 GewStG). The municipality sets the multiplier (Hebesatz); it was not looked up here.

Income tax

This page contains no information on income tax, advance payments and profit determination (cash-basis accounting, balance-sheet accounting). Please consult a tax adviser.

Who is responsible
  • Tax office (Finanzamt)
  • Tax adviser
  • Chamber of crafts (business advice)
Further reading
Invoicing and e-invoicesSetting up and registering a business

Quick questions

Worum geht es bei „Taxes and the small business scheme“?
Small business limits of 25,000 and 100,000 euros, trade tax allowance of 24,500 euros and the reverse charge for construction services.
Which deadlines and figures matter?
  • 25,000 euros / 100,000 euros: Turnover limits: previous year at most 25,000 euros, current year at most 100,000 euros. (§ 19 Abs. 1 UStG)
  • 5 calendar years: Binding period after opting out of the small business scheme; afterwards revocation with effect from the start of a following year is possible. (§ 19 Abs. 3 UStG)
  • 24,500 euros: Allowance on trade income of natural persons and partnerships. (§ 11 Abs. 1 GewStG)
  • 3.5 %: Tax base rate on trade income. (§ 11 Abs. 2 GewStG)
  • last day of February of the second following year: Latest date for submitting the opt-out declaration or revocation to the tax office. (§ 19 Abs. 3 UStG)
What should I do first?
  • Estimate your turnover: Estimate your turnover for the first year and check the limits for small businesses.
  • Decide: Small business without VAT or standard taxation with input tax deduction: both have advantages and disadvantages.
  • Check construction services: For orders from construction businesses, find out whether the tax liability passes to the client.
What do I need to watch out for?
  • As a small business owner you may not show VAT on invoices and have no input tax deduction.
  • If the 100,000-euro limit is exceeded in the current year, the exemption lapses. Monitor your turnover continuously.
  • The opt-out declaration is irrevocable (§ 19 Abs. 3 UStG) and binds you for five calendar years; afterwards revocation is possible with effect from the start of a following year. Declaration and revocation are possible until the last day of February of the second following year.
Evidence
  • § 19 UStG, gesetze-im-internet.de, retrieved 20 September 2026
  • § 13b UStG, gesetze-im-internet.de, retrieved 20 September 2026
  • § 11 GewStG, gesetze-im-internet.de, retrieved 20 September 2026
  • § 48 EStG, gesetze-im-internet.de, retrieved 20 September 2026
  • § 48b EStG, gesetze-im-internet.de, retrieved 20 September 2026
As of

September 2026 · Sources and method

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