Wait, what? What are you talking about? The whole point of being a Kleinunternehmer is not to charge VAT and not to submit VAT declarations. 

True, that’s what §19 paragraph of the VAT Act is about. But, as usual in Germany, there are exceptions. 

Expenses with Reverse Charge

Reverse Charge is an EU directive that covers who pays VAT in intra-EU trade. We covered the topic in a separate article. In short - the customer, not the seller, is liable to report and pay VAT locally.

Reverse Charge means your suppliers in other EU countries send you invoices without VAT. You are liable to report and pay this VAT. For the non-Kleinunternehmen, it’s not an issue. They will deduct it as input tax (Vorsteuer). 

Kleinunternehmen can’t deduct input tax. And with Reverse Charge - they haven’t paid the VAT. This makes Kleinunternehmen liable to report the unpaid VAT to the Finanzamt and pay it. 

How likely will it happen to me?

Actually, highly likely. Even if you are not in manufacturing and don’t order materials from Poland or machinery from Belgium. Paying for digital products and services is enough. Most tech companies are registered in Ireland. They will invoice you with Reverse Charge invoices, leaving you to figure out the VAT thing yourself.

💻 If you pay for Google or Meta Ads, they will send you an invoice without the VAT.

Do I really have to pay?

Yes. I wish the answer would be no, but by law, you are obligated to pay VAT as a Kleinunternehmen. Moreover, Finanzamts know that 90% of Kleinunternehmen miss this.

⚠️ Missing to report or missing to pay the VAT can lead to fines from Finanzamt.

Ufff. Is there anything else I need to know? 

Yes 🙂 If you have business clients in other EU countries - you don’t charge VAT anyway. Nevertheless, you have to file a Zusammenfassende Meldung. It’s not a tax, only a declaration required by the EU, where you list your EU clients with their VAT IDs. 

How to deal with this

This nuance is hard to miss and very annoying. But hey, now you are more tax proficient than 90% of Kleinunternehmen.

Norman AI knows this topic as well. It automatically extracts this data from invoices and highlights the relevant tax declarations (both advance VAT and ZM). Simplify your tax life with Norman Autopilot.