Do I have to show sales tax as a small business owner?
February 17, 2024 | 50,00 EUR | answered by Karl Albrecht
Dear tax consulting team,
I am Jenny Meier and I am about to start my own small business. I have extensively researched the topic of self-employment and I am aware that as a small business owner, I am exempt from VAT as long as my annual turnover is below 22,000 euros.
My question is whether as a small business owner, I still have to show VAT on my invoices. I am concerned that I may be in violation of tax regulations if I do not handle VAT correctly. At the same time, I do not want to lose potential customers who insist on having VAT shown on my invoices.
Could you please explain to me whether as a small business owner I must show VAT on my invoices and what consequences this could have for me? Is there possibly a way to voluntarily show VAT in order to accommodate my customers without running into tax issues?
I would greatly appreciate your professional advice on this matter, as I place great importance on starting my self-employment correctly and legally from the beginning.
Thank you in advance for your support.
Sincerely,
Jenny Meier
Dear Jenny Meier,
Thank you for your question regarding sales tax as a small business owner. It is important to be aware of tax regulations in order to avoid potential issues from the beginning. As a small business owner according to § 19 UStG, you are exempt from sales tax as long as your annual turnover is below the threshold of 22,000 euros. This means that you do not need to show sales tax on your invoices.
If you as a small business owner show sales tax on your invoices, this could lead to misunderstandings with your customers. Since you are not required to charge sales tax as a small business owner, this could result in your customers wrongly claiming the sales tax as input tax, which could lead to tax issues.
However, there is an option to voluntarily show sales tax to accommodate your customers. In this case, you must clearly indicate that it is a voluntary disclosure and that you are exempt from sales tax as a small business owner. By clearly marking this on your invoices, you can avoid potential misunderstandings and at the same time accommodate your customers.
It is important to be aware that showing sales tax as a small business owner is voluntary and does not bring any tax benefits to you. Therefore, it is advisable to adhere to tax regulations and not show sales tax on your invoices to avoid potential tax issues.
I hope that I have answered your question comprehensively. If you have any further questions or require individual advice, I am at your disposal.
Sincerely,
Karl Albrecht, Tax Advisor
