What Section 19 means
The small-business rule exempts you from charging and remitting VAT. In exchange you lose the input tax deduction — you cannot reclaim the VAT on your own purchases.
The rule is optional. You can waive it and charge VAT normally, but you are then bound to that choice for five years.
- You add no VAT to your prices.
- You issue invoices without a tax line, carrying a reference to Section 19.
- You file no VAT returns.
- You cannot deduct input tax.
The underlying problem with Shopify
There is no „enable small-business rule“ switch in Shopify. The platform is built internationally, and a German special case is not part of it.
Change nothing and you run a store that charges 19 percent — tax you may neither collect nor remit. That creates problems with the tax office and with your customers.
- Shopify calculates tax on German orders automatically by default.
- The order confirmations Shopify produces carry no Section 19 note.
- You have to make the configuration yourself, in more than one place.
The store's tax settings
In the Shopify settings under taxes and duties, select Germany — or whichever country you are liable in — and switch off tax calculation for that region.
Shopify then charges no VAT on any order. Your product prices become gross prices: the customer pays exactly what the product page shows.
Verify the change with a test order afterwards. Tax settings behave differently by region and product type, and a misconfiguration otherwise surfaces on the first real invoice.
What belongs on the invoice
Small-business filers still have to issue proper invoices. The mandatory details under Section 14 still apply — only the tax line falls away, replaced by the reference to Section 19.
The most expensive mistake here: show VAT by accident and you owe it to the tax office, even without being liable. That is Section 14c.
For the invoice side — layout, numbering and generating Section 19 invoices straight from Shopify — see belegio.
- Full name and address of seller and buyer
- Tax number — a VAT ID is not required under the small-business rule
- Sequential, unique invoice number
- Date of issue and date of supply
- Quantity and description of the goods
- Total amount with no tax shown
- A reference to the exemption under Section 19
When the thresholds fall
There are two thresholds and they work differently — a distinction that is often missed.
The 25,000-euro threshold relates to the previous year. Cross it during the current year and you stay a small-business filer for the rest of it, becoming subject to standard taxation on 1 January of the following year.
The 100,000-euro threshold takes effect immediately. Cross it during the year and the status ends with exactly the sale that crosses it — from that transaction on you must charge VAT.
An example: you start in 2026 with no prior-year turnover and reach 40,000 euros. In 2026 you remain a small-business filer, because 100,000 was not crossed. In 2027 you are automatically under standard taxation, because the prior year exceeded 25,000.
- Notify your tax office that you fall under standard taxation from the following year.
- Switch Shopify's tax calculation back on.
- Reconfigure the accounting software and adjust the invoice template.
- Decide whether prices stay gross or rise by the tax — a commercial decision, not a tax one.
The accounting has to follow
The store setting alone is not enough. Your accounting tool has to be set to small business as well, otherwise it produces documents with VAT while the store charges none.
In sevdesk that sits under settings and company type, in Lexware Office at the corresponding place in the company settings. Both then issue documents without tax and with the Section 19 note.
This is exactly where the typical contradictions appear: store without tax, accounting with — or the other way round. It often only surfaces when the tax adviser reviews the documents.
How zrapp handles the case
With zrapp configured for the small-business rule, priority 0 of the four-step system applies: every document is issued without VAT and with a reference to Section 19.
The decisive point is that this priority overrides every other rule. If a French company orders with a valid VAT ID, reverse charge does not apply — Section 19 does, because a small-business filer shows no tax at all, not even with a reverse-charge note.
During setup, zrapp compares your choice against your accounting account's settings and warns on contradictions — before they turn into incorrect documents. The setup in detail is in connecting Shopify to sevdesk and connecting Shopify to Lexware Office.
