Small business regulation (Germany)

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The small business regulation according to § 19 UStG is a simplification regulation in sales tax law, which grants entrepreneurs with low sales the right to be treated largely like non- entrepreneurs . The small business owner is still subject to the Value Added Tax Act, even if the activity is only part- time ; to this extent , the sales tax also arises ( § 38 AO) , but the tax is not levied by the tax office ( § 218 ff. AO). In essence, small businesses can therefore do without the identification and payment of sales tax, but are then also excluded from the input tax deduction on invoices from other businesses.

functionality

Sales tax is not levied by entrepreneurs if the relevant turnover plus the applicable tax did not exceed EUR 22,000 in the previous calendar year (until 2019: EUR 17,500) and is not expected to exceed EUR 50,000 in the current calendar year. Certain tax-free sales ( Section 19 (3) UStG) and sales of fixed assets that exclude input tax deduction are not included in the relevant sales. ( § 19 Abs. 1 S. 1 and 2 UStG).

Small business owners' sales are therefore not tax-exempt. Rather, for reasons of simplification, the sales tax due is simply "not charged". If an entrepreneur makes use of the regulation of § 19 UStG, he must note on every invoice that the sales tax is not shown and charged. § 14 Paragraph 4 No. 8 UStG applies analogously. Only the net value may be listed in the invoice without specifying sales tax rates and sales tax. This prevents a service recipient who is entitled to input tax deduction from drawing input tax from the small business owner's invoices. If a small entrepreneur still shows sales tax, he is obliged to pay this to the tax office, which can only be prevented or reversed by correcting the incorrect tax ID in the invoice ( Section 14c (2), Section 17 (1)).

If the tax for the previous calendar year does not exceed 1,000 euros, the tax office can exempt the entrepreneur from the obligation to submit advance notifications and make advance payments ( Section 18 (2) sentence 3 UStG). In justified cases, however, the exemption should not be granted. Section 18 (4a) of the UStG determines the general obligation - even when using the small business regulation - to submit advance notifications and tax returns for:

  1. Entrepreneurs who owe the tax for domestic intra-community acquisitions for consideration (Section 1 (1) No. 5 UStG),
  2. Entrepreneurs who, as service recipients, owe the tax in accordance with Section 13b (5) UStG ( reverse charge procedure ),
  3. Entrepreneurs who pay the tax according to § 25b para. 2 UStG as the last buyer of an intra-Community triangular transaction, as well as
  4. Vehicle supplier according to § 2a UStG.

The addition of Section 18 (4a) of the UStG means that an entrepreneur must always submit an advance VAT return when the above-mentioned facts are implemented. The EUR 1,000 limit no longer plays a role since a BMF letter dated December 14, 2018.

Sales limit

The sales limit includes all sales received and value-added tax-relevant free value taxes . This does not include sales such as the sale of fixed assets, certain tax-free sales ( Section 19 (3) UStG) or sales in the context of a business sale . Ultimately, the amount of revenue actually received is deemed to be sales. If these include sales tax (and the entrepreneur does not fall under the small business regulation), the sales tax must be included in the calculation of the sales limit. If sales tax is not to be paid because it is already a small business, only the proceeds received are relevant for the limit of 22,000 euros.

Free value taxes, d. H. Profit-effective additions for items and services that are (can) also be used privately are only relevant to sales tax and therefore included in the sales limit if these items and services are entitled to input tax deduction.

Since the small business status is linked to the person and not to the company, multiple references to the small business regulation are not possible. If several businesses are run, all sales taxable income is added. In addition, there are VAT-free goods and services that are not used to determine the small business turnover limit, such as the following tax exemptions for deliveries and other services (Section 4 No. 11 to 28 UStG ):

  • medical treatment,
  • Trafficking in human organs,
  • Rental and leasing of land,
  • Services of building society and insurance agents and insurance brokers,
  • Offers from general or vocational schools or also
  • Services of independent teaching staff at such institutions.

Suffrage

The application of the small business regulation can acc. § 19 Abs. 2 UStG can be waived. If the entrepreneur waives, he is bound to it for five calendar years . During this time, his sales are subject to the general rules of the Value Added Tax Act (so-called option for regular taxation).

An option for regular taxation can be expressly declared to the tax office or by implied behavior in such a way that the small business owner submits a sales tax return on a form provided for standard taxation in which he calculates the sales tax according to the general provisions of the law and applies the input tax deduction has made.

If the entrepreneur mainly works for other entrepreneurs who are entitled to input tax deduction, regular taxation can bring advantages, because then the small entrepreneur can also claim input tax deduction himself. In the case of purchases and other input sales charged with sales tax, he only has to finance the net amount. On the other hand, the need to have to refer to the application of the small business regulation in invoices ( § 14 Abs. 4 Nr. 8 UStG) can represent a loss of image, since the efficiency of the small business could be assessed lower than that of a "thoroughbred entrepreneur".

Entrepreneurs who exclusively or predominantly address their goods or services to private customers who are not entitled to input tax deduction and who foreseeably remain below the relevant turnover limits can only charge their customers the net amount and grant them objectively lower prices compared to taxable competitors.

Entrepreneur

When starting or changing the activity, registration and registration by the responsible tax office is usually required. Business start-ups must estimate their turnover for the year they were founded as well as for the following business year and make them credible to the tax office . If the entrepreneur has only carried out his commercial or professional activity in part of the calendar year, the sales achieved in this period must be extrapolated to total annual sales. If the turnover is expected to exceed € 22,000, the application of the small business regulation is ruled out from the outset. If the turnover in the founding year exceeds € 22,000 (until 2019: € ​​17,500), the small business regulation may no longer be used in the following financial year.

Web links

Individual evidence

  1. ↑ Bunjes / Korn, 15th edition 2016, UStG § 19 marginal no. 18th
  2. ↑ Section 18.2, Paragraph 2, Clause 3 UStAE
  3. ↑ Adaptation of section 18.2 UStAE: Consequences of practice - BMF letter of 14 December 2018, III C 3 - S 7015/17/10002; 2018/0979679 Opinion of the DStV to the Federal Ministry of Finance, March 1, 2019
  4. ↑ The requirements of the small business regulation. kleinunternehmer.de, accessed on March 24, 2017 (© 2013–2016).
  5. ↑ cf. BFH judgment of July 24, 2013 - XI R 14/11
  6. ↑ cf. BFH judgments in BFHE 145, 457, BStBl II 1986, 420, under II.1.b; in BFHE 202, 403, BStBl II 2003, 904, under II.2.b; Section 19.2. Paragraph 1 Clause 4 No. 2 Clause 2 UStAE
  7. ↑ Robert Chromow: Practical course on sales tax, input tax and value added tax Status: May 26, 2013
  8. ^ For example in Lower Saxony