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Small-business VAT exemption — explained simply
One of the first things founders stumble over: "Should I charge VAT or not?" In the German-speaking region (DACH), the Kleinunternehmerregelung is the shortcut for small turnovers — less paperwork, but with a catch. Here's the essentials in plain language, no legal jargon. No prior knowledge needed.
What the exemption actually means
Normally a self-employed person adds VAT to their invoices and remits it to the tax office. As a small business under this rule you opt out: your invoices carry no VAT and you file no advance returns — but in return you cannot reclaim the VAT on your own purchases (the input VAT).
The core in one sentence
Less paperwork and roughly a fifth cheaper prices for private customers — in exchange for giving up the input-VAT deduction. It's voluntary and tied to turnover limits.
The turnover limits (as of 2025)
🇩🇪 Germany
As of 2025: up to roughly €25,000 turnover in the prior year and an expected €100,000 in the current year. If the current-year limit is exceeded, the exemption ends from the transaction that breaks it. (Until end of 2024 the figures were €22,000 / €50,000 — the 2025 reform raised them.)
🇦🇹 Austria
As of 2025 the limit is around €55,000 annual turnover (up from €35,000), with a one-time tolerance if you only just exceed it. Details and the tolerance rule change — check the current status.
🇨🇭 Switzerland
Switzerland has no "Kleinunternehmerregelung" in the narrow sense. Instead you only become VAT-liable once your turnover reaches 100,000 CHF a year. Below that you need not register — but may do so voluntarily, e.g. to reclaim input VAT.
Are you a small business? — Quick check
A rough orientation based on the 2025 limits. Runs locally in your browser, nothing is sent. Not tax advice.
Pros & cons, honestly weighed
👍 When it pays off
Your customers are mostly private individuals, you buy little yourself, and you want to keep paperwork small. Then you stay cheaper and skip the advance returns.
👎 When it holds you back
You invest a lot (equipment, software, materials) — then the input-VAT deduction is real money you forgo. Or you sell mainly to businesses that reclaim VAT anyway — then the price advantage is irrelevant to them and opting out only costs you.
🪧 The "small business" signal
Some fear that "small business" on an invoice looks unprofessional. In practice hardly anyone cares — base the decision on your cost structure, not on image.
AI takes the busywork — not the responsibility
AI can draft invoice templates, sort turnover and pre-formulate questions for your tax adviser — it doesn't make the decision for you. aban news shows daily where AI genuinely helps in business. Free.
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Common questions
What is the small-business VAT exemption in one sentence?
A simplification for small turnovers: no VAT on your invoices, none to remit, no advance returns — in return no input-VAT deduction. Voluntary and tied to turnover limits.
What are the turnover limits?
They differ by country and change. As of 2025: Germany roughly €25,000 prior year and €100,000 current year, Austria around €55,000 annual turnover. Switzerland instead has a VAT obligation from 100,000 CHF. Check the current official figures.
Can I switch later?
Usually yes — you can voluntarily switch to standard taxation (often with a multi-year commitment) or fall out automatically once you exceed the limits. Exactly how and from when depends on the country; best clarified for your specific case.
Does this apply in Switzerland?
Not as a "Kleinunternehmerregelung". In Switzerland you only become VAT-liable from 100,000 CHF annual turnover; below that you need not register.
aban news is a Swiss sole proprietorship and gives no tax, legal or financial advice. All content is general information and does not replace individual advice. Tax rules change and differ by country — check the current status or consult a licensed professional.