Insights
VAT
Switch from Small‑Business Exemption to Standard Taxation
Payments received for services that were provided and invoiced without VAT during the period in which the small‑business exemption applied remain tax‑exempt even if collected later.
In a recent ruling the Federal Fiscal Court (Bundesfinanzgericht, BFG) confirmed that, for classification as a small‑business taxpayer under VAT law and for calculating the relevant turnover threshold, the year in which the turnover is actually earned (time of supply) is decisive, not the date of receipt.
Tip: If an entrepreneur’s (expected) turnover in a year is just above or just below the current small‑business threshold of EUR 55,000 gross, early advice is recommended to ensure a timely adjustment of accounting and invoicing practices.
Tip: If an entrepreneur’s (expected) turnover in a year is just above or just below the current small‑business threshold of EUR 55,000 gross, early advice is recommended to ensure a timely adjustment of accounting and invoicing practices.