Small business scheme: limits and switching to standard VAT

In short: Small businesses charge no VAT on invoices and remit none. Since 2025 the limits are 25,000 euros of revenue in the previous year and 100,000 euros in the current year. Anyone who exceeds them is taxed under the standard scheme.

In more detail: What counts is net revenue. The 25,000-euro limit refers to the previous year, the 100,000-euro limit to the current year: if it is exceeded during the year, the exemption ends immediately. You can also opt voluntarily for standard VAT, but you are then bound for at least five years.

In detail

• Advantage: less bureaucracy, no VAT pre-return, prices without a surcharge.
• Disadvantage: no input VAT deductible on purchases, sometimes less attractive for B2B business.
• Option: useful for high initial investments (e.g. expensive equipment) and customers who can deduct input VAT.
• Invoice: without VAT shown and with a note (Invoice as a small business).
• Founding year: in the founding year the expected revenue counts.

See also: Small business rule (§ 19 UStG), Input VAT deduction