Kleinunternehmer or Regelbesteuerung in 2027? A Decision Tree for Three Kinds of Freelancers

Most freelancers meet the Kleinunternehmerregelung twice: once on the tax registration form, when they tick a box without much thought, and once when a client asks why there is no VAT on the invoice. The second conversation usually goes better if the first decision was deliberate. Here are the rules as they stand for 2027, then a decision tree by client type.

The rules in 2027

§ 19 UStG exempts your turnover from VAT if your total turnover "im vorangegangenen Kalenderjahr 25 000 Euro nicht überschritten hat und im laufenden Kalenderjahr 100 000 Euro nicht überschreitet." Both conditions must hold. The limits have been at these levels since 1 January 2025; nothing is announced for 2027.

Four consequences follow, all spelled out in the BMF-Schreiben of 18 March 2025:

• The €25,000 test looks backwards. If your 2026 turnover ends at €26,000, you are in standard taxation from 1 January 2027, whether you like it or not.
• The €100,000 test bites immediately. In the ministry's words: "Bereits der Umsatz, mit dem diese Grenze überschritten wird, ist nicht mehr nach § 19 Abs. 1 UStG steuerfrei." Not from next year, not from next month, that invoice.
• New businesses start small. In the founding year the €25,000 limit applies to the current year; cross it and you are out from the crossing turnover on.
• No input VAT. Because your turnover is tax-exempt, § 15 Abs. 2 Satz 1 Nr. 1 UStG excludes the deduction. A €2,500 laptop plus 19% costs you €2,975, and the €475 is gone.

You can leave voluntarily. § 19 Abs. 3 lets you declare to the Finanzamt, irrevocably, that you waive the exemption, by the end of February of the second following calendar year. The catch is in the same paragraph: the waiver binds you for at least five calendar years. That is what makes this a planning decision rather than a form-filling one.

The decision tree

Conclusion first: the question is not "how much do I earn" but "who pays me, and can they reclaim VAT".

Reader 1: you bill German businesses only

Standard taxation, almost always. Your client books your €5,000 invoice plus €950 VAT and reclaims the €950 the same month. Your price to them is unchanged. You, in turn, reclaim VAT on your laptop, software, coworking desk and phone. Two more points weigh in:

• The mandatory note on a small-business invoice signals your turnover is under €25,000. Some clients read it exactly that way.
• From 2028 you would have to issue e-invoices anyway under standard taxation; as a Kleinunternehmer § 34a UStDV spares you. That is a convenience, not a business reason. The three dates and what they mean for you are in E-Invoicing in Germany 2027.

The exception: you are genuinely small, part-time, and have almost no input VAT. Then the admin saving of no Umsatzsteuervoranmeldung is real. Our piece on the side-hustle republic covers that profile.

Reader 2: you bill private customers

Stay in the scheme as long as the thresholds let you. Your customers cannot reclaim anything, so 19% VAT is either a 19% price increase for them or a 16% margin cut for you. Coaches, tutors, photographers and copywriters for individuals belong here.

The risk is the cliff. At €100,000 the exemption ends mid-year with the crossing invoice. At €25,000 in one year it ends for the next. If you are heading for either, decide in the autumn before, adjust prices with notice, and do not let the tax office decide your timing.

Reader 3: you sell across EU borders

Since 1 January 2025, § 19a UStG lets a German Kleinunternehmer use the exemption in other EU countries too, if the EU-wide turnover "im vorangegangenen Kalenderjahr 100 000 Euro nicht überschritten hat und im laufenden Kalenderjahr nicht überschreitet." The BZSt runs it: you register through its online portal, receive a Kleinunternehmer-Identifikationsnummer, and file a turnover report every quarter, due 30 April, 31 July, 31 October and 31 January, including zero reports. The national thresholds of each destination country apply on top, and participation ends the moment the €100,000 is exceeded.

Two honest caveats. First, this mostly matters if you sell to private customers or small businesses abroad; for services to VAT-registered business clients in the EU the reverse-charge mechanism usually shifts the VAT to them regardless of your scheme. Second, place-of-supply rules differ by service type. This reader should spend an hour with a tax adviser before the first foreign invoice, and the decision tree above only tells you which hour to book.

One worked example

A designer starts in March 2026, bills €18,000 in 2026 as a Kleinunternehmer to two agencies. Fine, under €25,000. In 2027 the agencies scale up: €4,000 a month, so €48,000. Still fine in 2027 (under €100,000), but 2027 turnover is above €25,000, so 1 January 2028 brings standard taxation automatically. The rational move is to waive the exemption for 2027 already: the agencies do not care, and the designer reclaims VAT on a €3,000 hardware refresh and €1,200 of software that year. The waiver runs to the end of 2031, which is a non-issue for someone who will be above the threshold anyway.

Same turnover, but the clients are private clients for wedding photography: stay small through 2027, raise prices in the autumn of 2027 with a note that VAT applies from January, and treat the switch as a planned price round.

What to do on Monday

1. Pull your 2026 turnover to date and your pipeline for the rest of the year. Above €25,000? Then 2027 is standard taxation and you should build VAT into every quote you send from now.
2. Sort last year's invoices by client type: German business, private, abroad. The largest bucket picks your branch of the tree.
3. Add up the VAT on your 2026 purchases. That number is what the Kleinunternehmer scheme costs you per year; compare it with the admin you save.
4. If you plan to waive voluntarily, write "five years" next to the decision and check whether you can live with it in 2031.
5. If either 2027 threshold is within reach, book a tax adviser for one hour before December, not after the invoice that crosses the line.

Whichever branch you land on, the number that changes it is turnover, and turnover comes from clients. A free profile on 9am shows your work to companies across DACH that hire freelancers directly.

Whether you are a Freiberufler or a Gewerbe changes other taxes, not this one; the difference is explained in Freiberufler or Gewerbe.

This article is general information for practitioners and does not replace tax or legal advice.