Small-business VAT scheme 2026

Definition

The small-business VAT scheme (§ 6 (1) Z 27 UStG) exempts businesses from VAT whose annual turnover did not exceed the limit of €55,000 (gross, 2026) in the previous year and has not yet exceeded it in the current one. Those using it charge no VAT but in return may not deduct input tax. Opting into regular taxation is possible.

Limit by year

Why it matters for fees

For a Werkvertrag or as a sole proprietor the limit decides whether 20.00 % VAT is added to the fee. For a VAT-registered client, though, VAT is a pass-through, their real cost stays the net fee.

See also

• Small-business flat rate, the income-tax flat rate with the same limit.
• Werkvertrag, when a fee is billed with or without VAT.