Actually, all entrepreneurs in Germany are subject to VAT. Small business owner who last year one Turnover up to 17.500 euros can be exempted from the obligation to pay sales tax, as can teachers for certain courses. When is an exemption possible and when does it make you Sinn?

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What is VAT exemption?

The VAT exemption is regulated in § 19 Abs. 1 UStG. Accordingly, all small-scale entrepreneurs whose turnover last year was under 17.500 Euro and will not be higher than 50.000 Euro in the current year are exempted from VAT.

You do not have to do anything else: the exemption is automatic.

Turnover tax: waiver of the small business rules

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If you are to private individuals merchandise or have municipal or state clients who are exempt from sales tax, the small business regulation is favorable for you. Because in this case you can offer your goods or services more cheaply because your customers can Value added tax don't have to pay.

However, if you are mainly at Companys merchandise and have high operating expenses on which you also pay sales tax, a sales tax exemption does not make sense: because every commercial company will be happy to pay you sales tax in addition to the fee.

However, you can keep the input tax on the sales tax that you pay to the tax office - and therefore have a higher profit overall.

In this case you should waive the exemption from VAT as per § 19 Abs. 2. For this purpose, you should make a cross on the questionnaire for tax registration or send an informal message to the tax office. However, the exemption from VAT is then binding for five years.

Sales over 17.500 Euro

If your turnover exceeds EUR 17.500, you are taxable from the beginning of the following year. If you fall below the limit again, you can be exempted again from the next year - unless you have declared your waiver of the exemption in the course of the last five years, in which case the exemption will remain decision binding.

You can voluntarily give up VAT exemption even retroactively for all tax years for which there is no tax assessment. However, you have to repeat the sales taxes from your customers - and that can sometimes lead to problems.

Sales tax exemption for teachers

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In addition to the small business regulation, according to § 4 paragraph 21 UStG, the teaching services of self-employed teachers are also exempt from VAT if they are based on a Job or properly prepare an examination to be taken in front of a legal entity under public law. Courses at public schools or universities are automatically exempt from VAT.

Private education institutions, on the other hand, should be certified by the competent state authority that their teaching fulfills the conditions of § 4 Abs. 21 UStG. In both cases, the exemption from tax is automatically applied to the teachers at the school.

On the other hand, non-profit institutions such as adult secondary schools are exempted from the VAT requirement pursuant to § 4 No. 22. Here, fee teachers are exempt from the value-added tax only if the Volkshochschule is still free for individual courses according to § 4 No. 21.

The conditions for exam and vocational preparation courses are usually met by vocational courses Further Training, Tutoring and language lessons, provided these prepare for exams or the job, school-leaving qualifications and PC courses. Purely hobby courses, languageCourses for vacation or IT events for senior citizens, however, cannot be exempted, as they have nothing to do with the job.

Invoice and accounting

If you are exempt from sales tax, you are not allowed to show sales tax on your invoices. However, you must on the on account note why you are exempt from VAT: For example, because you make use of the small business regulation - in this case your invoice will say exempt from VAT according to § 19 Para. 1 UStG. And you may for yours expenditure Of course, no input tax can be deducted either.

The tax exemption and also the waiver of exemption always applies to all your business areas. So if you have registered two companies, for example because you are still working as a freelancer, you are either liable for VAT or exempt from VAT.

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