Kleinunternehmerregelung

[Sx4]

Hello,
i have a couple of quick questions about Kleinunternehmer status and rules.
Last year, I registered in October as a Kleinunternehmer (research scientist/Freiberufler), and worked on a couple of small projects, but the company paid for those invoices in January 2025. Does that mean my first year as Kleinunternehmer income was 0 Euro? If yes, than what income limit applies to the second year (2025).

Also is there a problem if I have only one company as a client and getting more and more projects from the same. The company even offered me a part time job but I am deciding to stay as selbständiger, so I can choose which projects to work on and which to undertake (yes, I do have that choice). Would there be any obvious benefit to be a part time employee (other than regular work/steady income, contributions to health and retirement system).

Thanks
sx4

[PandaMunich]

Last year, I registered in October as a Kleinunternehmer (research scientist/Freiberufler), and worked on a couple of small projects, but the company paid for those invoices in January 2025. Does that mean my first year as Kleinunternehmer income was 0 Euro? If yes, than what income limit applies to the second year (2025).

Yes.

If your 2025 turnover with a "VAT location" of Germany (client is a German business or a non-German non-business) will be up to 25.000€, see § 19 (1) Satz 1 UStG: https://dejure.org/gesetze/UStG/19.html
then you will be a Kleinunternehmer both in 2025 and in 2026.

If your 2025 turnover with a "VAT location" of Germany (client is a German business or a non-German non-business) will be more than 25.000€ but up to 100,000€, see § 19 (1) Satz 1 UStG: https://dejure.org/gesetze/UStG/19.html
then you will be a Kleinunternehmer in 2025 but no longer in 2026.

If your 2025 turnover with a "VAT location" of Germany (client is a German business or a non-German non-business) will be more than 100,000€, see § 19 (1) Satz 1 UStG: https://dejure.org/gesetze/UStG/19.html
then you will be a Kleinunternehmer in 2025 only up to the turnover with which you are still under 100,000€ and from the turnover with which you exceeded the 100k€ limit, you should have charged German VAT in your invoices.

Please note that if your business client is non-German, that turnover does not count towards the 25k€/100k€ Kleinunternehmer limits.

Please also read: https://www-steuertipps-de.translate.go ... r_pto=wapp

Also is there a problem if I have only one company as a client and getting more and more projects from the same. The company even offered me a part time job but I am deciding to stay as selbständiger, so I can choose which projects to work on and which to undertake (yes, I do have that choice). Would there be any obvious benefit to be a part time employee (other than regular work/steady income, contributions to health and retirement system).

Paid sick leave and paid vacation.

[Sx4]

OP here, with a couple of follow-up questions:
So it looks like my work as a Kleinunternehmer is taking off well, I have received many small projects and likely will exceed the 25k Euro limit (just by a little more, but not by too much) for Kleinunternehmer.

1. Do I start paying Vorauszahlung (at the time of registration as a Kleinunternehmer I had written that the projected income would be around 10K Euro and Finanzamt had not required any Vorauszahlung; of note: I pay Vorauszahlung for my Kapital Einkomm from dividends of Mutual funds). Do I need to inform (and how) the FA about the income change (from previously submitted expectations).

2. I know starting next year I will no longer be a Kleinunternehmer and will be a standard tax paying Selbständiger, how does one start paying VAT (that I would collect) to FA (I have a VAT ID number). My work is mostly home computer based and scientific advice to my clients, so there is no/hardly any purchase VAT paid. I might just take the pauschale (if any) while submitted the taxes.

3. I read that the Rentenversicherung is voluntary, how do I make sure if this is true for me (as a scientific researcher and adviser). If true, is there a benefit to still sign up (how/where do I sign up?).

Lastly, where do I learn more about tax/Rentenversicherung/VAT etc for selbständiger? I did read websites like Steuertipps, accountable, Gründer, Existenzgründerportal, and got a good overview but I need specifics to my situation/field.
Thanks as always, I appreciate your input/advice.

[kaffeemitmilch]

Please note that if your business client is non-German, that turnover does not count towards the 25k€/100k€ Kleinunternehmer limits.

Oh really? I have been looking for this info. Thanks! So, a non-german (US, in this case) client can pay me whatever and I can remain a Kleinunternehmer? If there aren't any German clients, I will have zero euro every year?

[PandaMunich]

Please note that if your business client is non-German, that turnover does not count towards the 25k€/100k€ Kleinunternehmer limits.

Oh really? I have been looking for this info. Thanks! So, a non-german (US, in this case) client can pay me whatever and I can remain a Kleinunternehmer? If there aren't any German clients, I will have zero euro every year?

Only if the US client is a business.

If it is a private person US client then the turnover does count towards the Kleinunternehmer limit.

[kaffeemitmilch]

Please note that if your business client is non-German, that turnover does not count towards the 25k€/100k€ Kleinunternehmer limits.

Oh really? I have been looking for this info. Thanks! So, a non-german (US, in this case) client can pay me whatever and I can remain a Kleinunternehmer? If there aren't any German clients, I will have zero euro every year?

Only if the US client is a business.

If it is a private person US client then the turnover does count towards the Kleinunternehmer limit.

Yeah, it's a small business. Super. Still setting this up but thanks for this tidbit.

[Sx4]

OP here, with a couple of follow-up questions:
So it looks like my work as a Kleinunternehmer is taking off well, I have received many small projects and likely will exceed the 25k Euro limit (just by a little more, but not by too much) for Kleinunternehmer.

1. Do I start paying Vorauszahlung (at the time of registration as a Kleinunternehmer I had written that the projected income would be around 10K Euro and Finanzamt had not required any Vorauszahlung; of note: I pay Vorauszahlung for my Kapital Einkomm from dividends of Mutual funds). Do I need to inform (and how) the FA about the income change (from previously submitted expectations).

2. I know starting next year I will no longer be a Kleinunternehmer and will be a standard tax paying Selbständiger, how does one start paying VAT (that I would collect) to FA (I have a VAT ID number). My work is mostly home computer based and scientific advice to my clients, so there is no/hardly any purchase VAT paid. I might just take the pauschale (if any) while submitted the taxes.

3. I read that the Rentenversicherung is voluntary, how do I make sure if this is true for me (as a scientific researcher and adviser). If true, is there a benefit to still sign up (how/where do I sign up?).

Lastly, where do I learn more about tax/Rentenversicherung/VAT etc for selbständiger? I did read websites like Steuertipps, accountable, Gründer, Existenzgründerportal, and got a good overview but I need specifics to my situation/field.
Thanks as always, I appreciate your input/advice.

Any advice on these questions?

[PandaMunich]

1. Yes, via ELSTER, there is a form "Antrag auf Anpassung der Vorauszahlungen".
2. You start submitting monthly Umsatzsteuervoranmeldungen via ELSTER, it has to be filed by the 10th for the preceding month, so you will start with January 2026 which you will have to file by February 10th.
   There is no longer a flat rate (Pauschale), and back when it existed, it anyway wasn't for activity.
3. Yes, it's true if you do not earn more than 5/6 of your turnover from just one client (if you do earn these 83.3% from one client, you have to pay mandatory public pension contributions, because of § 2 Nr. 9 SGB VI: https://dejure.org/gesetze/SGB_VI/2.html
   Paying into German public pension insurance is money down the drain (you will never get out of it what you paid in, well, if you live up to age 200, you will ), so only do so voluntarily if suits your purposes.
   For example, if you want to apply for German citizenship, you will need to gather 60 pension months, in that case, voluntarily pay in the minimum of (in 2025) 103.42€ per month, which is the contribution rate of 18.6% multiplied by the mini job limit which rises every year (in 2025, it's 556€): https://www-deutsche--rentenversicherun ... r_pto=wapp
4. Finanztip is an excellent source: https://www.google.com/search?q=Finanzt ... 3%A4ndiger
   You would also profit from reading these pages:
   - https://expertise.tax/en/faq-german-tax-system/
   - https://expertise.tax/en/german-tax-refund/
   - https://expertise.tax/en/what-is-a-beleg/

[Sx4]

Thanks, this really helps!

[Sx4]

[*]Yes, it's true if you do not earn more than 5/6 of your turnover from just one client (if you do earn these 83.3% from one client, you have to pay mandatory public pension contributions, because of § 2 Nr. 9 SGB VI: https://dejure.org/gesetze/SGB_VI/2.html
Paying into German public pension insurance is money down the drain (you will never get out of it what you paid in, well, if you live up to age 200, you will ), so only do so voluntarily if suits your purposes.
For example, if you want to apply for German citizenship, you will need to gather 60 pension months, in that case, voluntarily pay in the minimum of (in 2025) 103.42€ per month, which is the contribution rate of 18.6% multiplied by the mini job limit which rises every year (in 2025, it's 556€): https://www-deutsche--rentenversicherun ... r_pto=wapp

This got me confused and probably complicated my plans. I am currently a Kleinunternehmer and not paying into the public pension. But I do have only one client (my field of AI based research in medical diagnostics is so restricted, there are hardly any jobs). I found only two research firms that had openings, one offered me contracts, the other declined. The former even offered my an option to join as a part or full time employee, but I declined as I wished to retain independence and choose when/how much to work. But I do use company software (AI portal, since the research is AI based).

I read somewhere that one can write to DRV and ask if ones setup is "Scheinselbständigkeit" or not. I wonder if this is true?

[PandaMunich]

You are not scheinselbständig.
Scheinselbständig were the poor, exploited Eismann delivery drivers, because Eismann wanted to avoid paying the employer's part of the social security contributions: https://www-berliner--zeitung-de.transl ... _hist=true

You are an "arbeitnehmerähnlicher Selbständiger (= a self-employed who is similar to an employee) , i.e. not someone exploited, but someone who chose to be self-employed.
You said so yourself, your client wanted to hire you as an employee, so they are not looking to avoid having to pay the social security contributions that are due in an employment.
You are caught by the 5/6 * turnover rule, there is no arguing about it.

The only thing you can do is apply for an exemption at DRV (Deutsche Rentenversicherung) for the first 3 years of your activity, by filling in and sending them form V0050.pdf: https://www.deutsche-rentenversicherung ... /V0050.pdf

But you can be sure that on the first day after that 3 year period has elapsed, DRV will come knocking, asking whether you still earn 5/6 of your turnover from one client and if yes, they will charge you mandatory public pension contributions from that point forward.

[Sx4]

You are caught by the 5/6 * turnover rule, there is no arguing about it.

The only thing you can do is apply for an exemption at DRV (Deutsche Rentenversicherung) for the first 3 years of your activity, by filling in and sending them form V0050.pdf: https://www.deutsche-rentenversicherung ... /V0050.pdf

But you can be sure that on the first day after that 3 year period has elapsed, DRV will come knocking, asking whether you still earn 5/6 of your turnover from one client and if yes, they will charge you mandatory public pension contributions from that point forward.

Thank you so much again. And this 3 year exemption from rentenversicherungpflicht is for when I am not a kleinunternehmer or irrespective of that (and starts this year while I am still a kleinunternehmer). I ask this because the website states application for exemption should be make within first 3 months of starting the work (Its already 6 months for me).

[PandaMunich]

And this 3 year exemption from rentenversicherungpflicht is for when I am not a kleinunternehmer or irrespective of that (and starts this year while I am still a kleinunternehmer).

The public pension exemption has nothing to with your tax status of Kleinunternehmer.
The 3 years started at the start of your freelance activity.

I ask this because the website states application for exemption should be make within first 3 months of starting the work (Its already 6 months for me).

The exemption is applied for 3 months retroactively if you apply within the first 3 months of your activity, otherwise only from the moment you apply.
--> if you apply now, you will have to backpay for the time between your start of the activity and the date of your exemption application, so you basically will only have 2.5 years of exemption.

This is laid down in § 6 (4) Satz 1 SGB VI: https://dejure.org/gesetze/SGB_VI/6.html

• 1Die Befreiung wirkt vom Vorliegen der Befreiungsvoraussetzungen an, wenn sie innerhalb von drei Monaten beantragt wird, sonst vom Eingang des Antrags an.
• 1The exemption takes effect from the time the exemption requirements are met if it is applied for within three months, otherwise from the time the application is received.

Please note that when you pay mandatory contributions as a self-employed into public pension insurance, DRV default to something called the "Regelbeitrag" (standard contribution), which - unless you earn very well - is higher than if you pay according to your real profit, i.e. than if you pay 18.6% of your average monthly profit.
So take care to apply to pay according to your real profit and not the Regelbeitrag (though for the first 6 months for which you will have to backpay, paying the default "50% * Regelbeitrag" may be more advantageous, depending on your real profit).

• Your contribution rate as a compulsorily insured self-employed person
  Your contribution rate is based on the current contribution rate (currently 18.6%) and the reference value, which is redefined annually for the West and East. If you are an artist or publicist, the Künstlersozialkasse pays half of your contribution in each case.
  
  • Half the standard contribution for newcomers
    Within the first three calendar years after the year in which you start your self-employed activity, you can opt for the so-called half standard contribution. This amounts to 348.29 euros in the old federal states and 322.25 euros in the new federal states.
  • Standard contribution
    You can pay the full standard contribution regardless of your income. It currently amounts to 696.57 euros per month in the old federal states and 644.49 euros in the new federal states.
  • Profit-based contribution
    You can also pay lower or higher contributions than the standard contribution if you can prove a different profit from your freelance work on the basis of your last income tax assessment.

DRV usually finds out about non-payers through their regular audits of German companies, which happen at least every 4 years (that' s the law, but I've seen small employers never getting audited): https://www-deutsche--rentenversicherun ... r_pto=wapp

--> if your client is a German company, you will probably be found out, even if you never approach DRV.
If your client is a non-German company, DRV has no way of getting to know that you freelance for them...