If you're self-employed in Germany, you've likely heard the terms Kleingewerbe and Kleinunternehmer—but what do they really mean? Although the words sound similar, they refer to two different concepts. One deals with how you register and run your business, while the other is all about your tax status. Let's break them down.
What is a Kleingewerbe?
A Kleingewerbe is a small-scale business registered with your local trade office. It's designed for entrepreneurs who want to keep things simple without jumping into the deep end of complex accounting. Here are the basics:
Who it's for: Ideal for sole traders (Gewerbetreibende) or partnerships (like a GbR) who want to launch a business quickly and with minimal bureaucracy.
Thresholds: 80.000 € profit or 800.000 € revenue in a year.
Accounting simplicity: If your business remains small, you can usually get away with simplified bookkeeping—often just using an income-excess calculation (EÜR) instead of full double-entry accounting.
Legal framework: Governed by the German Trade Regulations (Gewerbeordnung) and the Commercial Code (Handelsgesetzbuch).
📈 Many entrepreneurs start small as a Kleingewerbe and later switch to a more complex structure as their business grows.
Who is a Kleinunternehmer?
In contrast, Kleinunternehmer is a tax status rather than a business form. This term comes from the VAT law (Umsatzsteuergesetz). It reduces your administrative burden when it comes to sales tax.
VAT exemption: If your revenue stays below specific thresholds, you can opt for the Kleinunternehmerregelung, meaning you don't need to charge VAT on your invoices.
Revenue thresholds: You're eligible if your previous year's revenue was less than 25.000 € and you expect to earn under 100.000 € this year.
What you give up: While saving time on tax filings and simplifying your pricing, you can't reclaim the VAT you pay on business-related purchases (Vorsteuer).
Who can apply: The Kleinunternehmer rule isn't just for registered businesses; even freelancers who don't register as a Kleingewerbe can opt in if they meet the revenue requirements.
🎁 The Kleinunternehmerregelung is an option, not an obligation. If you prefer to charge VAT and reclaim it on expenses, you can forgo this status. Here are the reasons you would want to do that.
Comparing Kleingewerbe and Kleinunternehmer
It helps to see the differences side by side. Check out this quick comparison:
| Kleingewerbe | Kleinunternehmer | |
|---|---|---|
| Legal Basis | Trade law (Gewerbeordnung) and Commercial Code (Handelsgesetzbuch) | VAT law (Umsatzsteuergesetz) |
| Purpose | Business registration and simplified accounting | Tax status offering VAT exemption |
| Applicability | For registered businesses (sole traders, GbRs) | Available to any business—including freelancers—meeting revenue limits |
| Benefits | Easy setup, less administrative hassle, simple bookkeeping | Fewer VAT-related administrative tasks; simpler invoices |
| Considerations | Personal liability; limited to specific legal forms | No VAT charging means no reclaim on VAT paid for business expenses |
💡 Many self-employed in Germany actually benefit from both—a business can be registered as a Kleingewerbe and still opt for the Kleinunternehmerregelung on its tax return.
Which one do you need?
It's not really an either/or situation. You can actually be both or none of them. Think of it like this:
If you're registering a business:
You'll go through a trade office registration process. If your operation is small enough, you can qualify as a Kleingewerbe.When it comes to taxation:
If your annual revenue is below the specified thresholds, you can choose the Kleinunternehmer status to simplify your VAT handling.For freelancers:
Most freelancers don't register as a Kleingewerbe at all. They simply register with the tax office. However, they can still opt for the Kleinunternehmerregelung if their income stays modest.
🔐 As your business grows, your needs may change. You might outgrow the Kleinunternehmer threshold or need to switch from simplified accounting to full commercial bookkeeping. It's a flexible setup—your choice today isn't set in stone.
Planning for growth
Even if the simplified rules suit you now, keep an eye on your revenue and profit:
Revenue monitoring:
Should your income approach or exceed the limits (for instance, if you start making over €100,000 in a year), it might be time to reconsider your tax strategy.Accounting upgrades:
Similarly, if your business becomes more complex, you may need to shift from simple EÜR bookkeeping to double entry-bookkeeping and balance sheet.
How Norman can help
Whether you're operating as a Kleingewerbe or enjoying the simplicity of the Kleinunternehmer tax status, Norman is here to make your accounting and taxes effortless. Our platform automates invoicing, bookkeeping, and tax filing so you can focus on growing your business instead of drowning in paperwork. With Norman's simple interface, you can blaze through bookkeeping and VAT-free invoicing.
For Kleinunternehmer specifically, we help in the Fragebogen zur steuerlichen Erfassung with revenue estimations and later with correct legal notices in invoices.
Conclusion
Understanding Kleingewerbe and Kleinunternehmer is essential for effectively setting up and managing your self-employment in Germany. Here's the takeaway:
Kleingewerbe deals with business registration and simpler accounting, which is perfect for starting small.
Kleinunternehmer is a tax option that lets you avoid the VAT hassle, provided your revenue stays within certain limits.
Evaluate your business model and future plans, and don't be afraid to adjust your status as your needs change. Whether you're a side-hustler or building your main income stream, knowing the differences means you can work smarter and keep your administrative workload in check.
Norman automates accounting and tax filing whether you are a Kleingewerbe or a Kleinunternehmer. Start now for free.