Kleinunternehmer Invoicing: When to Switch to Regular VAT (Regelbesteuerung)

You started out as a Kleinunternehmer (small business exempt from VAT), wrote your first invoices, and business is going well. At some point the question comes up: should I switch to regular VAT (Regelbesteuerung)? Maybe you’re getting close to the turnover limit, maybe business clients expect VAT on your invoices, or you’re frustrated that you can’t reclaim VAT on expensive purchases.

This guide explains when the switch becomes mandatory, when it makes sense voluntarily, and how to prepare the transition step by step.

Key points

The Kleinunternehmer scheme ends on 1 January if your turnover last year exceeded 25,000 euros.
It ends immediately if your turnover this year exceeds 100,000 euros. The very sale that crosses the limit is taxable in full.
A voluntary opt-out applies from the start of a calendar year and binds you for five years (§ 19(3) UStG).
After the switch, you file VAT advance returns quarterly or monthly, depending on how much VAT you owe. The monthly rule for the first two years only applies to new businesses.
Kleinunternehmer can apply for a VAT ID (USt-IdNr) too.
For purchases made during your Kleinunternehmer period, an input tax adjustment under § 15a UStG may apply.

When the switch becomes mandatory

The Kleinunternehmer scheme under § 19 UStG is tied to turnover limits. If you exceed them, regular VAT applies by law. You don’t need to apply for it.

The turnover limits

25,000 euros in the previous year: if your total turnover last calendar year exceeded this, regular VAT applies from 1 January.
100,000 euros in the current year: if you exceed this during the year, the Kleinunternehmer scheme ends immediately.
In the year you start, only one limit applies: 25,000 euros in the current year (BMF letter of 18.03.2025, section 19.1(3) UStAE).

What counts is total turnover, not profit, based on payments received (§ 19(2) UStG). Turnover from all your self-employed activities is added together.

Limits since 1 January 2025: until the end of 2024, the limits were 22,000 euros (previous year, gross) and 50,000 euros (forecast for the current year). Since the Annual Tax Act 2024, they are 25,000 euros and 100,000 euros, as net figures. Older guides often still quote the old numbers.

What happens when you exceed 100,000 euros?

The status used to continue until the end of the year. Since 2025, that no longer applies.

If you exceed 100,000 euros during the year, the Kleinunternehmer scheme ends at that moment. The sale that takes you over the limit is already taxable in full. It is not split (BMF letter of 18.03.2025, section 19.1(2) UStAE).

Example from the BMF letter: Business owner A had 20,000 euros turnover last year and 80,000 euros so far this year. A new client orders goods for 40,000 euros and pays straight away. With that payment, A exceeds 100,000 euros. The whole 40,000 euros is subject to regular VAT, not just the part above the limit.

In practice:

The invoice that takes you over the limit already shows VAT.
So do all invoices after it.
From then on, the normal filing duties apply. You file VAT advance returns and an annual VAT return for the year.

If you cross the limit and only notice weeks later, you’ll already have written invoices without VAT that were actually taxable, and you owe the tax anyway. So keep an eye on your turnover as it gets close to the limit.

When a voluntary switch makes sense

Even below the limits, opting out of the Kleinunternehmer scheme can be the better choice.

You mainly work with business clients

Business clients deduct the VAT on your invoices as input tax. For them, your price effectively doesn’t change. Some companies still expect invoices with VAT, for example because their processes are set up that way.

You have high business expenses

As a Kleinunternehmer you pay the full VAT on every purchase and can’t get it back. If you regularly buy hardware, software, equipment or services, input tax deduction can be worth several hundred or thousand euros a year.

Your business is clearly growing

If you can see you’ll reach one of the limits soon, a planned switch at the turn of the year is easier than a forced one mid-year.

Clients in other EU countries

For business with companies in other EU countries you usually need a VAT ID. Kleinunternehmer can get one from the Federal Central Tax Office (BZSt) too. You don’t have to switch to regular VAT for that. Whether the Kleinunternehmer scheme still makes sense for your cross-border sales is worth checking with a tax adviser.

Invoicing: Kleinunternehmer vs. regular VAT

Invoice as a Kleinunternehmer

As a Kleinunternehmer, your invoice includes a note about the exemption and shows no VAT:

Service description: web design project
Invoice total: 2,000.00 EUR
Note: “No VAT charged under § 19 UStG (Kleinunternehmer).”

Invoice under regular VAT

After the switch, you show VAT separately:

Service description: web design project
Net amount: 2,000.00 EUR
VAT (19%): 380.00 EUR
Invoice total: 2,380.00 EUR

What changes on your invoices

Element	Kleinunternehmer	Regular VAT
VAT shown	No	Yes (19% or 7%)
Note on § 19 UStG	Required	Dropped
Tax number (Steuernummer) or VAT ID	Required	Required
Net amount, rate, VAT amount	No	Required
Input tax deduction	No	Yes

The full list of mandatory details is in our guide to professional invoices.

Tip: check open quotes and contracts. If you agreed fixed prices, clarify whether VAT is charged on top or included in the agreed price.

Step by step: how to switch to regular VAT

Step 1: Pin down the date

Mandatory switch: regular VAT starts on 1 January after a previous year over 25,000 euros, or with the sale that crosses 100,000 euros. You don’t need to apply.
Voluntary opt-out: you declare it to your tax office (Finanzamt). It applies from the start of the calendar year it’s meant for and binds you for five calendar years (§ 19(3) UStG). You can declare it up to the end of February of the year after next; for 2026, that’s 29 February 2028.

Step 2: Apply for a VAT ID if you need one

If you need a VAT ID, for example for clients in other EU countries, apply to the Federal Central Tax Office. For domestic sales, your Steuernummer on the invoice is enough.

Step 3: Update your invoice templates

remove the § 19 UStG note
show the net amount, rate and VAT
include your Steuernummer or VAT ID

Step 4: Prepare for VAT advance returns

How often you file depends on your VAT for the previous year (§ 18(2) UStG):

more than 9,000 euros: monthly
up to 9,000 euros: quarterly

The rule requiring monthly returns in the first two years only applies to businesses that are starting out. If you were already trading as a Kleinunternehmer, it doesn’t apply to you. The Finanzamt will tell you which period applies; ask if in doubt.

Deadlines: the advance return is due on the 10th day after the period ends. A permanent filing extension (Dauerfristverlängerung) gives you one month more.

Step 5: Adjust your bookkeeping

Under regular VAT you need to:

record the VAT rate for every income and expense item
only deduct input tax from proper invoices
treat VAT in your EÜR as income, and input tax and payments to the Finanzamt as expenses

Step 6: Check for an input tax adjustment

If you made larger purchases as a Kleinunternehmer that you keep using after the switch, such as a company car or expensive equipment, the switch can trigger an input tax adjustment under § 15a UStG (section 15a.2(2) UStAE). You can then reclaim part of the VAT you paid back then, pro rata for the remaining period of use. The reverse applies if you switch back to the Kleinunternehmer scheme: part of the input tax you deducted may have to be repaid.

There’s no adjustment if the input tax on the asset doesn’t exceed 1,000 euros (§ 44(1) UStDV). For larger amounts, have a tax adviser check the calculation. They’ll need the invoices for the purchases concerned and the date from which you use them.

Step 7: Tell your clients

Let existing clients know about the change, especially private clients. For them your service becomes 19% more expensive, unless you lower your net price. Business clients usually aren’t affected, since they deduct the VAT as input tax.

Worked example: does a voluntary switch pay off?

Scenario: freelance developer

Annual turnover: 18,000 euros net
Annual business expenses: 5,950 euros gross, of which 950 euros VAT
Client mix: 80% business clients, 20% private clients

As a Kleinunternehmer:

Income: 18,000 euros
Expenses: 5,950 euros, VAT paid in full
Result: 12,050 euros

Under regular VAT, all clients pay 19% on top:

Income: 18,000 euros net, plus 3,420 euros VAT that you pass on to the Finanzamt
Expenses: 5,000 euros net; you get the 950 euros input tax back
VAT due: 3,420 − 950 = 2,470 euros
Result: 13,000 euros

Advantage: 950 euros a year, the input tax refunded. The higher your expenses, the bigger the advantage.

That only holds if every client pays the VAT on top. With private clients you have to weigh it up: either the price rises by 19%, or you lower your net price. If you keep the gross price for the 20% private clients (3,600 euros), you lose about 575 euros, and the advantage shrinks to about 375 euros.

Common mistakes when switching

1. Not adjusting ongoing contracts

If you’ve agreed fixed prices without a VAT clause, the switch can be expensive. Clarify beforehand whether you can add VAT or have to pay it out of your margin.

2. Missing the first advance return

The first advance return is due on the 10th day after your first filing period under regular VAT ends. Missing it risks late-filing and late-payment surcharges.

3. Still writing invoices without VAT

If you keep writing invoices without VAT after the switch, you still owe the tax, worked out of the gross amount. Your clients can’t deduct input tax without VAT shown on the invoice. Invoices you issued correctly before the switch remain valid.

4. Underestimating the opt-out

A voluntary opt-out binds you for at least five calendar years. Think carefully about whether the switch makes sense long term. A mandatory switch because you crossed a limit has no such lock-in: once you’re back under both limits, the Kleinunternehmer scheme applies again automatically.

Checklist for the switch

3 months before: check turnover, decide, ask a tax adviser if anything is unclear
If needed: apply for a VAT ID from the Federal Central Tax Office
1 month before: update invoice templates, switch over your accounting software, tell clients
On the day: first invoice with VAT
Larger purchases in recent years: check for an input tax adjustment
After the first period: file your first advance return
After year end: file the annual VAT return

How Solobooks makes the switch easier

You make the switch in Solobooks in your VAT settings. After that:

Invoices with VAT: you choose the rate for each line, and Solobooks works out net, VAT and gross. As a Kleinunternehmer, Solobooks adds the § 19 UStG note automatically.
VAT advance return straight to ELSTER: Solobooks builds the return for each period from your transactions. You check the figures and submit it directly to the tax office.
DATEV export: for your tax adviser.

Try free for 14 days. You can read more on our bookkeeping with Solobooks page.

Frequently Asked Questions

Can I switch to regular VAT voluntarily as a Kleinunternehmer? Yes, by declaring it to the Finanzamt. The opt-out applies from the start of a calendar year and binds you for at least five years.

When do I have to start showing VAT on my invoices? From 1 January of the year you opt out for, from 1 January after a previous year over 25,000 euros, or immediately from the sale that takes you over 100,000 euros.

Do I need to correct my old invoices? No. Invoices you issued correctly as a Kleinunternehmer remain valid.

What happens to ongoing projects at the time of the switch? In principle, what counts is when you provided the service. Services provided before the switch stay exempt, even if the client pays later. There’s an exception when you cross 100,000 euros: then the payment received that takes you over the limit is already taxable.

Do I have to file monthly advance returns after the switch? Only if your VAT for the previous year was over 9,000 euros. Otherwise quarterly. The monthly rule for new businesses doesn’t apply to a switch.

Do I need regular VAT for business in the EU? Not to get a VAT ID. Kleinunternehmer can apply for one too.

Do I need a tax adviser for the switch? Not necessarily. One makes sense for ongoing fixed-price contracts, cross-border sales, and when an input tax adjustment for larger purchases may apply.

Sources

Last checked: 30 October 2026. This article is general information, not tax advice for your individual case. Legislation and official guidance change — the current version of each source prevails.

Last updated: October 30, 2026