Kleinunternehmer - small self-employed business

So I got a job at a local club here. My boss is telling me that I can claim this through the finanzamt and not have to pay German taxes on my income. What exactly is this, and is it related to a Steuenummer? He is also saying that maybe I can use my American number (as in my social?... how does that work?)

I work as a contractor here, and I do have a Steunummer, and I know that if I make less than 400EU per month at this second job I will not have to claim it. However, that means less than 3 days I would be working and I am interested in more.

Any help is greatly appreciated! Thanks!

The "Kleinunternehmerregelung" is a German law which allows the self-employed and small business owners to avoid paying MwSt (German VAT) for a period of time providing their net income is below a set limit. For more information check out this page.

A "Kleinunternehmer" is simply a collective noun for a small (often single-man) company. If you take an additional "Mini-Job" with a monthly income limit of €400 you do not need to pay any additional taxes, but you must have a contractual relationship with your employer who must also declare your employ with him and will have some liabilities for social and health insurance over and above the €400 he pays you.

If you simply work as a freelancer, then you may need to register this self-emplyment ("Gewerbeanmledung") and will certainly have a number fo forms to complete, as well as having to maintain and submit formal accounts which may lead to additional tax liabilities. If your turnover is small you can optionally register for VAT which may have some financial advantages but adds to the paperwork required.

If your boss is saying you can "claim through the Finanzamt", "not have to pay taxes" or even that you can use your "American number" it sounds like he really doesn't know what he is talking about as none of his words make immediate sense, so you should seek clarification, either from him, or someone who does know.

YL6

Just a short note, when I first came here I noticed that most people do not really know anything about German tax law, for example everyone says that you get money back from the Tax department for your expenses, -... when what they actually mean is that you can deduct it from your earnings.

Would you care to explain that? Deduct what from earnings?

Hey guys,

So I am a "Kleinunternehmer" (small business owner) and apparently exempts me from collecting Umsatzsteuer. OK, so far, so good.

I think, however, that this may only apply for this year. Next year I hope to be making over the limit. (I was told it was 16.000€?)

So is it possible to change a) my status - do I move on to become just an Unternehmer?
or do I just start charging and paying Umsatzsteuer next year?

Right now this seems OK, but I would really like to avoid headaches in the near future. Any advice on if I'm on the right track?

Thank you!

It's nothing to do with you being a "Kleinunternehmer", it's simply a case of if your turnover is sufficient to require you to register for MwSt or if you simply do it voluntarilly. If your turnover (not earnings or profit!) in the previous calendar year was less than €17,500 and your turnover this year is not expected to be over €50,000, then there is no requirement to register for, nor to collect MwSt. However, if you exceed these limits (or even if you exceeded €17,500 last year irrespective of this years expectations) then you MUST register and collect. (In fact, you can collect before you register). Certain trades can register for standardised percentages, rather than having to go through the process of collecting and returning. A Journalist for example, while collecting 16% on all his invoices only has to return 4.8% of his turnover back to the taxman. Irrespective of turnover you can still register and submit MwSt returns (which in my opinion is always the thing to do, as you save 16% on all business purchases, with only minimum effort required to submit the regular returns).

Note that you must submit returns monthly in the first year of registration, but thereafter only monthly if the tax owing exceeded €6136 in the previous year, otherwise you can submit quarterly. If your taxload the previous year was less than €512 then you only need to submit a return at the end of the year. If you are required to submit monthly, and are prepared to pay 1/12 of your submitted tax from the previous year as advance payment in January, then you can submit your returns up to a month later than the usual 10 days after the tax period just elapsed. Failure to return a MwSt return within the allocated time can lead to heavy fining, especially if this is a recurring lapse.