Umsatzsteuerbefreit is a term used in German tax law to describe a business that is exempt from paying value-added tax (VAT). This type of tax exemption is available to small businesses in accordance with the German Value Added Tax Act (UStG). In this article, we will look at what umsatzsteuerbefreit means, how it applies to small businesses, and the benefits of being umsatzsteuerbefreit.
What Is Umsatzsteuerbefreit?
Umsatzsteuerbefreit is a term that is used in German tax law to describe a business that is exempt from paying value-added tax (VAT). This type of tax exemption is available to businesses that meet certain criteria, such as having a limited turnover and/or a limited number of employees. Umsatzsteuerbefreit businesses are not required to charge their customers VAT, but are still responsible for filing their taxes and paying any other applicable taxes.
Tax Exempt Status for Small Businesses Under §6 Abs. 1 Z 27 Ustg.
Under §6 Abs. 1 Z 27 Ustg of the German Value Added Tax Act, small businesses may be eligible for umsatzsteuerbefreit status. To be eligible for umsatzsteuerbefreit status, a business must meet certain criteria, such as having a limited turnover and/or a limited number of employees. Businesses with a turnover of less than €17,500 per year are eligible for umsatzsteuerbefreit status, as are businesses with fewer than five employees.
Businesses that are umsatzsteuerbefreit are not required to charge their customers VAT, but are still responsible for filing their taxes and paying any other applicable taxes. Additionally, businesses that are umsatzsteuerbefreit may be eligible for certain tax deductions, such as reduced rates on capital gains taxes.
Umsatzsteuerbefreit status is a valuable tool for small businesses in Germany, offering them tax relief and the ability to remain competitive in the marketplace. By meeting the criteria set out under the German Value Added Tax Act, small businesses can take advantage of the benefits of being umsatzsteuerbefreit and enjoy the financial benefits of being exempt from VAT.
