The small business regulation offers many self-employed and small business owners a simplified way of exempting themselves from VAT liability. However, important changes are coming from 2025, which are particularly important for entrepreneurs who operate in the border area of this regulation. In this blog post, you will find out what changes you can expect and how you can best prepare to continue to benefit from the advantages.
What is the small business regulation and why is it so attractive?
The small business regulation allows entrepreneurs who do not exceed certain turnover limits to be exempt from VAT. This means that you do not have to show VAT on your invoices. This eliminates the need for both regular advance VAT returns and the VAT return at the end of the year.
Previously, the following turnover limits applied:
- The previous year’s turnover was not allowed to exceed 22,000 euros.
- Turnover for the current year was not expected to exceed EUR 50,000.
This regulation is attractive for many small businesses, as it minimizes both bureaucratic effort and financial burdens. But what will change from 2025?
The changes to the small business regulation from 2025
From 2025, the turnover limits are to be adjusted to take account of growing economic conditions and inflation. The details of the new regulation are as follows:
- Increase in the turnover limit for the previous year to EUR 25,000.
- Introducing a turnover limit for the current year of EUR 100,000.
This adjustment is designed to give small business owners greater flexibility without immediately becoming subject to VAT obligations. It’s especially beneficial for businesses operating close to the previous thresholds, as they can remain within the small business scheme for a longer period.
What’s new, however, is that these thresholds are now fixed limits. If you exceed them, you will immediately lose your small business status and must begin charging VAT on your invoices. Unlike before, this will trigger an in-year transition to standard taxation.
Before and after comparison:
| Until 2024 | From 2025 | |
|---|---|---|
| Turnover previous year | 22,000 euros | 25,000 euros |
| Turnover current year | expected to be no more than 50,000 euros | 100,000 euros |
What impact will the new regulations have on you?
For many small businesses, the increase in turnover limits means that they will be exempt from VAT liability for longer. This means less bureaucracy and more flexibility in pricing. Especially in times of growing inflation and economic uncertainty, this can be a relief for many entrepreneurs.
However, you should ask yourself: does it make sense to remain a small business owner in the long term, or is voluntary VAT liability worthwhile? This is because VAT liability also allows you to claim input tax deductions, which can be particularly advantageous for larger investments.
We recommend that you talk to your tax advisor to discuss all potential cases in the best possible way and examine them in detail.
How to optimally prepare for the changes
In order to benefit from the new regulations, you should already have an eye on your sales forecasts for 2024 and, if necessary, take measures to avoid unexpectedly falling out of the small business regulation. Here are some tips on how you can prepare:
- Review of sales: Take a close look at your income for the current year and plan your sales realistically for 2025.
- Price adjustment: Take advantage of the opportunity to structure your prices flexibly without slipping directly into VAT liability.
- Checking the input tax option: Calculate whether it is worthwhile for you to voluntarily switch to VAT liability, especially if you regularly plan larger investments.
Activation or deactivation of the KU rule in easybill
Handling tax-free documents in easybill is very simple: to activate the small business regulation, set up your account so that you specify in the tax master data that you do not make use of the VAT statement. And then? Nothing more! The system takes care of the rest for you automatically. A reference to §19 UStG (small business rule) is automatically included by easybill in your invoices, cancelations or credit notes. Lean back and relax.
Are you no longer a small business owner according to the new regulations from 2025? That’s no problem either. Our support team will be happy to help you at any time if you have any questions. Otherwise, deactivating the KU rule or activating standard taxation is done in no time at all. As soon as you have created your last invoice for 2024, the changeover can begin. In your basic account settings, activate the option to show taxes with immediate effect. All additional information on documents will also be deactivated from this point onwards.
From then on, new documents will be shown with a totals block containing the total net amount, the VAT amount and also the total gross amount. Familiarize yourself with the settings in good time or contact us.
More leeway for small businesses from 2025
The adjustments to the small business regulation from 2025 offer more flexibility and relief for small businesses. By increasing the turnover limits, you as an entrepreneur can benefit from the exemption from VAT liability for longer. However, you should continue to monitor the development of your turnover closely to ensure that you do not exceed the new limits. Good planning and, if necessary, the decision to voluntarily switch to VAT liability can improve your financial situation in the long term.
So stay prepared and take advantage of the new opportunities offered by the small business regulation from 2025!
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