Ask a tax advisor on the topic of Sales tax / Turnover tax

Small business owner with requested VAT ID number - am I no longer considered a small business owner?

August 2, 2013 | 25,00 EUR | answered by Dipl.-Kfm. Frank-Olaf Illiges

Hello,

I am a "small entrepreneur" (freelance translator) and I always state on my invoices "This invoice is exempt from VAT according to § 19 (1) UStG". In the past years, my turnover has not exceeded €17,500. It doesn't seem like it will surpass that amount this year either (2013).

I have set myself the goal of increasing and further professionalizing my activities as a translator in order to hopefully earn more than €17,500 in the future (one wants to treat themselves to something in life). Therefore, I have been successfully conducting intensive customer acquisition.

I have now been offered to work for a client (in the EU) as a contractually bound "freelancer", which promises regular assignments. However, they are now asking for my VAT number. I do not have one yet, as I am not required to provide one or pay VAT as a small entrepreneur in Germany.

Perhaps a bit prematurely, I have applied for a VAT number online at my tax office in order to be able to provide one. I have read that I do not have to pay VAT in Germany or abroad, and therefore do not have to provide a VAT number, as long as I do not earn more than €17,500. I fall under the regulation according to §19, which I indicated to the tax office at the time.

But if my turnover exceeds €17,500 in a year, do I have to start invoicing with VAT (19%) in the following year and do the whole VAT return process, right?

However, as long as I am below the €17,500 threshold, do I not have to worry about VAT and continue to invoice as usual? (With the regular tax number and submit my income tax return once a year as usual)

Or am I now, after applying for a VAT ID, automatically obligated to invoice with VAT, even if I continue to be below the €17,500 threshold (for 2013)?

Thank you for your information.

Best regards,

Translator

Dipl.-Kfm. Frank-Olaf Illiges

Dear inquirer,

Thank you for your inquiry, which I would be happy to answer taking into account your effort and the rules of this platform.

Please note that my explanation is based on the facts presented, and that adding, omitting, changing information, or the ambiguity of the information can change the tax result.

As long as you do not exceed the turnover threshold of 17,500.00 EUR per calendar year and thus meet the requirements of the small business regulation of § 19 (1) of the German Value Added Tax Act (UStG), there will be no changes for you regarding your turnover and income tax assessment, even though you have applied for and received a VAT identification number from the Federal Central Tax Office in accordance with § 27a UStG. As a small business owner, you are not allowed to use this VAT identification number when creating your invoices (§ 19 (1) sentence 4 UStG in conjunction with § 14a (1), 3 and 7 UStG).

You should continue not to show any VAT on your invoices and indicate your tax status as a small business owner by stating "This invoice remains VAT-free in accordance with § 19 (1) UStG". This applies especially to your customers in other EU member states. Inform these customers that as a small business owner, you are not allowed to use the VAT identification number.

Kind regards,
Dipl.-Kfm. Frank-Olaf Illiges
Tax advisor
Am Wieksbach 55
33378 Rheda-Wiedenbrück

Phone: 05242/4055666
Fax: 05242/4055677
e-mail: office@illiges-steuerberatung.de
Website: www.illiges-steuerberatung.de