What is: Small business regulation for Amazon sellers?

The small business regulation is a tax simplification measure under § 19 UStG. It allows you as an entrepreneur with low revenue to omit VAT from your invoices and exempts you from monthly advance VAT returns, while simultaneously denying you the right to deduct input tax.

What does the small business regulation mean for you in concrete terms?

In principle, the rule in Germany is: anyone who sells something must pay VAT (usually 19% or 7%) to the tax office. The small business regulation is an exception to this obligation. It was created to reduce the bureaucratic burden for founders and small companies.

To be eligible for this regulation, you must meet two thresholds:

1. Your revenue in the previous calendar year was under €25,000.
2. Your revenue in the current calendar year is not expected to exceed €100,000.

If you meet these criteria, you issue your invoices with the same net and gross amount. This means you do not add 19% on top, but you also do not pay any VAT to the tax office. In return, you cannot reclaim the VAT you pay on your own purchases or Amazon fees from the tax office (no input tax deduction).

Why is this so important for Amazon sellers?

For many Amazon sellers, the small business regulation is the starting point for their e-commerce business. While it seems temptingly simple at first glance, it harbors specific pitfalls within the Amazon ecosystem.

Here are the three most important points you need to know:

• The competitive advantage: Since you do not have to pay VAT, you can theoretically offer your products at a lower price than the competition—or achieve a higher margin at the same price (provided your customers are private individuals).
• The invoicing requirement: Even as a small business owner, you must issue invoices. These must not contain any VAT . It is crucial that you explicitly state the reason for the missing tax. A sentence such as "In accordance with § 19 UStG, no VAT is charged" is mandatory. If this sentence is missing or if you accidentally show tax, you owe that amount to the tax office immediately.
• The FBA trap (Attention!): This is the biggest stumbling block. The German small business regulation applies only in Germany. If you use Amazon FBA (Fulfillment by Amazon) and also store your goods in Poland or the Czech Republic (CEE program), you are often immediately liable for tax in those countries—regardless of your turnover. The German § 19 UStG does not apply here. You will need local VAT IDs in those countries.

Important note: The small business regulation is a German law. As soon as Amazon stores your goods abroad, you immediately lose this status for sales generated in those countries. Read here how to master the tax labyrinth abroad: Amazon FBA Tax: PAN-EU & CEE – How to navigate the tax labyrinth safely

Practical example: What it looks like on paper

Imagine you sell a handmade coffee mug on Amazon for 20.00 euros.

• Scenario A (Standard taxation): Out of the 20 euros, 3.19 euros (19% of the net amount) belongs to the tax office. Your actual revenue is only 16.81 euros. In return, you get the tax on your Amazon fees refunded.
• Scenario B (Small business status): The full 20 euros is your revenue. You do not pay anything to the tax authorities. However, the Amazon fees and your cost of goods are more expensive for you, as you have to pay the full tax included in them and cannot get it refunded.

Whether the regulation is worth it therefore depends heavily on your margins and your expenses.

How does Amainvoice help with the small business regulation?

Especially with Amazon, where dozens of orders can come in daily, manual bookkeeping is not an option. Amainvoice takes the complexity of the small business regulation off your hands completely and ensures that your tax compliance remains intact.

This is how we specifically support you:

• Correct invoicing on autopilot: Amainvoice automatically generates an invoice for every Amazon order. We recognize your status and ensure that the invoice shows 0% VAT is shown.
• Legally compliant notices: Our system automatically adds the legally required reference to Section 19 of the German Value Added Tax Act (UStG) to your invoices. You don't have to worry about warnings due to formal errors.
• Data preparation for your tax advisor: We prepare all data so that your tax advisor can import it directly into their system (e.g., DATEV). They can immediately see which sales fall under the regulation.
• Overview for international storage: If you use FBA abroad, Amainvoice helps you and your tax advisor to clearly separate transactions so that you are correctly reported abroad, even if you are still a small business owner in Germany.

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This article is for general information purposes only and does not constitute tax or legal advice. Please consult a qualified tax advisor regarding your individual situation.

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