Should I still use the small business regulation or not?
March 11, 2015 | 40,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
Hello,
we are two individuals who founded a GbR in October 2014. During a one-time tax consultation, we were advised to make use of the small business regulation for the time being. In October, November, and December 2014, our total revenue was 6,140 €. We expect a revenue of slightly over 30,000 € for the year 2015. Are we still considered small business owners, and if not, how should we proceed to avoid any issues with the tax office?
Dear client,
Thank you for your inquiry, which I would like to answer based on the information you provided and in the context of your business operations in an initial consultation as follows:
The so-called small business regulation is governed by § 19 UStG. You are considered a small business owner if your total turnover did not exceed 17,500 EUR in 2014 and is not expected to exceed 50,000 EUR in 2015. Both conditions must be met.
However, in your case, the issue is the year 2014. Since you started your business in October 2014, you must extrapolate the estimated turnover at the time of establishment to a full year. The small business threshold would then be 3/12 of 17,500 = EUR 4,375 in 2014. So, if it was foreseeable at the start of your business in 10/2014 that you would exceed the turnover of EUR 4,375, you would not be considered a small business owner in 2014 and would have to pay (retroactively) VAT. If it was not foreseeable at the start in 2014 that you would exceed the turnover of EUR 4,375, there would be no adverse consequences for you. You just have to argue accordingly to the tax office. In general, you cannot be punished retroactively for the year 2014. You would still be considered a small business owner in 2014.
From 2015, however, you are no longer considered a small business owner, as the first requirement for the small business regulation is not met. You must submit quarterly VAT advance returns taking into account the extension of the deadline on 10.05, 10.08, 10.11.2015, and 10.02.2016.
I hope this information has been helpful to you.
Yours sincerely,
Ulrich Stiller
Tax consultant
Schwabstr. 40, 71229 Leonberg
You should contact your tax advisor immediately regarding this matter.
