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Updated June 2026

Should You Opt Out of the Kleinunternehmerregelung Early?

You don’t have to wait until you exceed €22,000. Opting into standard VAT early can help — or hurt — depending entirely on who you sell to.

Last updated: June 2026

KU threshold
€22,000
previous year, plus €50,000 current year forecast
Binding period if you opt out
5 years
before you can switch back
Decision deadline
Start of the calendar year
opt-out generally applies from year start

Opting into standard VAT tends to help if...

  • Most clients are VAT-registered businesses who reclaim the VAT you charge
  • You have significant Vorsteuer (input VAT) to reclaim — equipment, software, office costs
  • You want to look more established for larger clients or tenders
  • You expect to exceed the Kleinunternehmer thresholds within the next year anyway

Staying a Kleinunternehmer tends to help if...

  • Most customers are private consumers who can’t reclaim VAT — 19% becomes a real price rise unless absorbed
  • Your reclaimable input VAT is genuinely small
  • You want the simplicity of no VAT returns (Umsatzsteuervoranmeldung)
  • You’re not planning to make large VAT-bearing purchases soon

What opting out actually involves

You can voluntarily waive Kleinunternehmer status (Verzicht auf die Kleinunternehmerregelung) even if your turnover is below the €22,000/€50,000 thresholds, by notifying your Finanzamt. Once you opt out, you charge standard VAT on your sales and can reclaim Vorsteuer on eligible business purchases — but you also take on regular VAT return filing obligations (typically monthly at first, then possibly quarterly).

The 5-year binding period

This is a significant, semi-permanent decision. Once you opt out of the Kleinunternehmerregelung, you are generally bound to standard VAT treatment for at least 5 calendar years before you can switch back — you cannot flip back and forth year to year based on which is more favourable at the time. Model your expected costs and client mix carefully before opting out.

Frequently asked questions

Can I opt out of Kleinunternehmer status mid-year?

Generally the opt-out applies from the start of a calendar year, so timing your decision around the German tax year matters — check with your Finanzamt or accountant for exact mechanics.

Can I switch back to Kleinunternehmer status after 5 years?

Yes, after the binding 5-year period ends, you can elect to return to Kleinunternehmer status if you’re still under the relevant thresholds at that time.

Do I have to file VAT returns as a Kleinunternehmer?

Generally no regular VAT returns are required as a Kleinunternehmer, which is one of its main appeals — you simply don’t charge or reclaim VAT.

What happens to VAT on purchases made before I opted out?

Generally not reclaimable, since you weren’t VAT-registered for standard treatment at the time of purchase — the opt-out applies going forward, not retroactively.

Is the decision different for a Freiberufler vs a Gewerbetreibender?

No, the Kleinunternehmer opt-out mechanics are the same for both — the distinction matters for Gewerbesteuer, not for this VAT decision.

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General guidance only. This decision has a 5-year binding period, so model it carefully. Always verify with the BZSt / your local Finanzamt or consult a qualified accountant before making decisions.

Related tools & reading

Germany VAT Registration Guide

The core Kleinunternehmer threshold and registration steps.

Ist- vs Soll-Versteuerung

Cash vs accrual VAT accounting once registered.

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Create a compliant German VAT invoice in 30 seconds.