A small business (Kleinunternehmer) is a business that follows two conditions1, 2:

  • last year's revenue was under 22,000
  • and this year's expected revenue is less than 50,000
Example 1: You make 30,000€ one year, so you are over the limit. The next year, you are not a small business anymore1. Next January, you must start charging VAT.
Example 2: You make 30,000€ one year, and 20,000€ the next. Your revenue is under the limit again, so you can be a small business again1.

If it's your first year, you must make less than 22,000€. This amount is prorated: if you start your business in the middle of the year, the income limit is half of 22,000€.

If you are a Kleinunternehmer, you can:

  • Choose not to charge VAT1. This makes accounting easier.
  • Choose not to be listed in the trade register (Handelsregister).

Both freelancers (Freiberufler) and tradespeople (Gewerbe) can be a Kleinunternehmer.

How to start a business in Germany ➞

How VAT works in Germany ➞