back to the small business
March 19, 2012 | 30,00 EUR | answered by Michael Herrmann
Dear Sir or Madam,
my husband worked as a freelancer as a skipper and yacht designer from 01/2007 to 02/2011. The revenues have decreased significantly in 2010 and 2011, as some orders were simply cancelled or not paid at all. Now my husband has accepted a very interesting offer for a permanent position (from 15.2.2011) limited to one year, and worked there until the end of October before falling very ill. Despite a severe depression, 8 weeks in a clinic, and all therapy attempts, no improvement could be observed. He is still on sick leave and the doctors do not see him returning to an office job. The best option for him is to return to his previous work as a skipper and yacht designer (preferring less money but a healthy man).
Since the pay is not very high and some orders are still pending, my question is, can we start again as a small business owner, or do we have to work with sales tax again?
Thank you for your response.
Dear inquirer,
First of all, thank you for your inquiry, which I would be happy to answer based on the information provided and in the context of your initial consultation. The response is based on the facts presented. Missing or incorrect information about the actual circumstances can affect the legal outcome.
The small business exemption according to § 19 of the Value Added Tax Act (UStG) is generally only tied to the revenue threshold of €17,500 or €50,000 in the first year of exceeding the revenue threshold.
An exception applies if the revenue threshold of €17,500 was already undercut in previous years and standard taxation was still carried out. In that case, you are bound to the option for five years, to continue to show sales tax even if the revenue threshold is not reached.
Unfortunately, you do not provide any information on the specific revenue in the years 2010 and 2011 and before, to assess whether this five-year period is running and if so, how much longer.
If less than €17,500 in revenue was generated in previous years, you could retroactively return to the small business exemption within the assessment period for these years, if the tax assessments are not final and the invoices are corrected.
In this case, however, you should seek more detailed advice than what is possible in this online consultation.
For the future, switching to the small business exemption is only possible without issues if more than €17,500 was always generated in previous years and therefore standard taxation was not opted for.
I hope that these details have provided you with a sufficient overview of the situation in the context of your inquiry and this initial consultation.
Kind regards,
Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax advisor
