Accounting

As a small business owner, you do not charge VAT but also cannot claim input tax. You are exempt from VAT pre-registrations and, since 2024, also from submitting VAT returns.

Your customers:

This can be advantageous if your customers are private individuals or not entitled to input tax deduction, allowing you to offer more competitive prices. If you have low investments and ongoing expenses, applying the small business regulation might also be sensible.

Your revenue:

You can apply the small business regulation if your revenue, including VAT:

• Did not exceed €22,000 in the previous calendar year, and
• Is not expected to exceed €50,000 in the current calendar year. Total revenue is calculated based on received payments, i.e., actual cash inflow.

In principle, an invoice is any document with which a delivery or other service is settled, Section 14 (1) sentence 1 UStG. A contract can also be regarded as an invoice, for example rental or service contracts (so-called standing invoice).

Criteria:

For VAT purposes in particular, an invoice must meet certain requirements so that the recipient of the service is entitled to deduct input tax. It must contain the following information, Section 14 para. 4 sentence 1 UStG:

full name and full address of the supplier and the recipient,
tax number or VAT ID of the supplier,
date of issue,
consecutive and unique invoice number,
quantity and type of goods supplied or scope and type of other service,
date of supply or other service or, in the case of advance payment, receipt of the consideration,
consideration for the supply or other service, broken down by tax rates and individual tax exemptions and, if applicable any reduction of the consideration agreed in advance,
tax rate and tax amount or, in the case of a tax exemption, a reference to this,
a reference to the recipient’s obligation to keep records in the case of property-related services,
Clear designation as a credit note if it is a credit note.

In general, an advance VAT return must be submitted to the tax office by the 10th day after the end of the advance return period, i.e. for monthly advance returns by the 10th calendar day of the following month (for weekends / public holidays by the next following working day).

Rules:

A permanent deadline extension is the option of extending the deadlines for submitting advance returns and making advance payments by one month. In the case of monthly advance returns, a special advance payment must be made by February 10 of the year. It amounts to 1/11 of the sum of the advance payments for the previous calendar year and is then credited again in December of each year. This is therefore not an additional tax, but merely a kind of deposit.

Our clients regularly use the permanent extension as it is difficult to prepare monthly accounts and advance VAT returns within 10 days, especially for larger companies.

In principle, commercial law stipulates that documents and receipts must be kept for six years.

A retention obligation of 10 years applies to:

Books and records,
inventories,
annual financial statements, management reports,
the opening balance sheet
as well as the work instructions and other organizational documents required to understand them,
accounting documents
documents in accordance with Article 15 (1) and Article 163 of the Union Customs Code.

In principle, these deadlines also apply to the tax regulations (Section 147 (3) sentence 1 AO). In special cases, longer deadlines may apply if documents are (still) relevant for taxation, e.g. for a tax audit.

(Legal status: 30.7.2024)

The job ticket or the Germany ticket is tax-free if it is granted in addition to the salary owed anyway or as a cash salary conversion in compliance with the 50-euro limit
In the case of company cars, the following generally applies taxation of private use at a flat-rate percentage of the gross list price:

Petrol / diesel: 1% of the unreduced gross list price per month
Hybrids: 0.5% of the unreduced gross list price per month
E-cars: 0.25% of the unreduced gross list price (max. EUR 70,000) per month

The job bike can be leased centrally by the employer. The employee does not pay tax on the leasing rate, but only on a non-cash benefit amounting to 0.25% of the gross list price.