What the small-business VAT exemption means since 2025
§19 UStG exempts eligible small-business transactions from German VAT. As a general rule, relevant turnover must not have exceeded €25,000 in the previous year and must not exceed €100,000 in the current calendar year. Turnover is calculated under statutory rules; it is not profit or an individual Shopify payout.
The exemption applies to the business, not just one store. Sales through other stores and other business activities can therefore count too. Input VAT deduction is generally unavailable for exempt transactions. Opting out of the exemption generally binds the business for at least five calendar years.
Distinguish the first year from an established business
When you first start the business, the threshold for that calendar year is €25,000. The €100,000 threshold does not apply to this first year. The transaction that exceeds €25,000 is already subject to regular VAT.
New-business example: You start in 2026 and generate €40,000 of relevant turnover. You do not remain exempt for the whole year. Sales up to the threshold can qualify; the transaction crossing the threshold and subsequent sales are taxable.
Established-business example: Your 2025 turnover was €20,000. In 2026 you can generally use the exemption up to the current-year limit of €100,000. If 2026 turnover is €40,000, the previous-year test excludes you from the exemption in 2027. This does not retrospectively make correctly exempt 2026 sales taxable.
Configure Shopify for exempt domestic sales
First determine your VAT status and which transactions are covered. Avoid a German tax registration setting that collects VAT on domestic sales exempt under §19. Check “Taxes and duties” in Shopify and the separate tax configuration of your invoicing app.
Disabling German VAT collection does not make every worldwide order exempt. Other registrations, destinations and special cases require separate checks. Test a German order, a refund and any relevant cross-border order before enabling automatic document creation.
Required details on a small-business invoice
For transactions exempt under §19(1), §34a UStDV sets out the minimum invoice details: both parties’ names and addresses, an accepted tax identification number of the supplier, the issue date, the type and extent of the supply, the total consideration and a reference to the small-business exemption.
Where the recipient issues the invoice under an agreed self-billing arrangement, it must also be labelled “Gutschrift”. An invoice number remains useful for tracking and archiving, but is not included in the minimum list under §34a. The general §14(4) checklist therefore cannot be presented unchanged as mandatory for these invoices.
For example: “This transaction is exempt from VAT under the small-business exemption in §19 UStG.” Do not show a separate VAT amount. Incorrectly stated VAT can create liability under §14c UStG; discuss the applicable correction procedure with your tax adviser.
Check cross-border sales separately
First determine the country where the transaction is taxable. Germany’s §19 exemption does not automatically extend to transactions taxable in another member state. Since 2025, §19a UStG provides a special EU reporting procedure with registration and additional eligibility requirements.
The €10,000 threshold for certain EU distance sales, possible OSS registration and intra-community B2B supplies must also fit your business model. A Shopify tag or app setting does not determine legal eligibility. See setting up OSS in Shopify for the separate tax scenarios.
Accounting and automation
Small businesses must still keep complete, traceable records of their transactions. The exemption concerns VAT, not all recording or retention obligations. Whether cash-basis accounting is sufficient or double-entry bookkeeping is required depends on other statutory criteria.
zrapp can create documents in sevdesk or Lexware Office using its configured §19 mode. Within the app this configuration takes precedence over other tax mappings. Enable it only for a legally suitable use case and check foreign sales separately. The software’s priority rule does not confirm that every order qualifies for §19.
Prepare before reaching the threshold
Monitor relevant total turnover regularly and prepare the change before crossing the limit. Update Shopify tax settings, invoice templates and the accounting integration together. Apply the correct treatment to each transaction rather than indiscriminately rewriting existing documents.
Small businesses are exempt from the obligation to issue structured e-invoices, but must generally be able to receive them since 2025. The B2B receiving guide explains the receiving workflow.
