Taxes
Small Business Regulation 2025: New Limits, New Opportunities
With the Annual Tax Act 2024, the revenue limits were drastically raised. Everything about the new thresholds of €25,000 and €100,000 from 2025.
For a long time, the magic limit of 22,000 euros was the measure of all things for small business owners. But with the Annual Tax Act 2024, the legislator drastically simplified the rules as of January 1, 2025, and raised the revenue thresholds.
Whether you're just starting or have been around for a while: Here you'll learn which numbers really count now and how you benefit from the new regulations.
The Update: The New Revenue Limits from 2025
Previously, small business owners had to laboriously distinguish between prior year revenue and expected revenue in the current year. From 2025, significantly higher thresholds apply:
| Period | Old Limit (until 2024) | New Limit (from 2025) |
|---|---|---|
| Prior year | €22,000 (Gross) | €25,000 (Net) |
| Current year | €50,000 (Forecast) | €100,000 (Actual) |
Most important change: The limits now refer to net revenue. Since you don't charge VAT as a small business owner, your gross revenue factually equals your net revenue. This makes the calculation much more transparent.
The "Guillotine Effect": Caution at 100,000 Euros
Previously, you could remain a small business owner for the entire year if your forecast at the beginning of the year was under 50,000 euros - even if you earned more at the end. That's over.
Since 2025, the rule is: As soon as you exceed the 100,000-euro mark in the current year, the so-called "guillotine effect" occurs. From the euro that breaks the limit, you become immediately subject to VAT. You must therefore switch your invoicing during the year.
Practical tip: Keep an eye on your revenue. With Clever Invoice, you always have your income in the dashboard overview.
The Advantages: Why the Regulation (Still) Pays Off
Less Bureaucracy
You don't have to submit monthly or quarterly VAT advance returns. From tax year 2024, the obligation for annual VAT returns even lapses for most small business owners.
Price Advantage in the B2C Market
If your customers are private individuals, you can offer your services 19% cheaper than the competition since you don't have to add VAT.
Simple Accounting
Your income-expenditure calculation (EÜR) remains clear. Use our VAT calculator for quick calculation.
The Disadvantages: When You Should Rather Waive
No Input Tax Deduction
You cannot reclaim VAT for purchases (laptop, company car, software) from the tax office. For large investments, this can be expensive.
B2B Disadvantage
Business customers don't care if you show VAT (they deduct it as input tax). Here, small business status can sometimes appear "small" or unprofessional.
Checklist: Are You Still a Small Business Owner in 2025?
- Was your revenue in calendar year 2024 under €25,000?
- Will your revenue in the current year 2025 presumably stay under €100,000?
- Do you have the correct reference to § 19 UStG on your invoices?
Reference on the invoice: "No VAT is charged according to § 19 UStG."
What Does This Mean for E-Invoices?
The e-invoicing obligation from 2025 also applies to small business owners! You must:
- From 2025: Be able to receive e-invoices
- From 2028: Also send e-invoices yourself
Your small business status doesn't change this. With Clever Invoice, you create XRechnung or ZUGFeRD - automatically with the correct § 19 reference.
Conclusion: More Room for Your Business
The raising of the limits is a clear signal for reducing bureaucracy. With up to 100,000 euros revenue in the current year, freelancers now have much more buffer before they have to deal with the complex VAT world.
Want to make sure your invoice is legally compliant? With Clever Invoice, you create invoices that automatically contain the correct paragraph - whether according to old or new regulation. Start for free now.
Frequently asked questions
Can I create e-invoices as a small business owner?
Yes, the e-invoicing obligation from 2025 applies regardless of the small business regulation. Small business owners must also be able to receive e-invoices and from 2028 also send them.
What happens if I exceed the €100,000 limit?
Unlike before, the "guillotine effect" occurs: From the euro with which you exceed the €100,000, you are immediately subject to VAT - even in the middle of the year.
Do the new limits also apply retroactively for 2024?
No, the new limits (€25,000 prior year, €100,000 current year) only apply from January 1, 2025. For 2024, the old values still apply.
Must I reference § 19 UStG on my invoice?
Yes, you must include a reference like "No VAT is charged according to § 19 UStG" on your invoice. With Clever Invoice, this is automatically inserted.
Does the small business regulation pay off for me?
This depends on your situation. With mainly B2C customers and low investments, it usually pays off. With high purchases or B2B focus, regular taxation can be more advantageous.