Insights
VAT
Agricultural Side Activities and the Small‑Business Turnover Threshold
From 1 January 2025 the turnover threshold for applying the small‑business exemption was raised from EUR 35,000 net to EUR 55,000 gross. The change also affects agricultural and forestry operators with side activities.
If the gross turnover of an entrepreneur remains below EUR 55,000 in the current and the preceding year, the entrepreneur is regarded as a small‑business operator. This means that no VAT has to be charged, but no input tax can be deducted either. The EUR 55,000 threshold applies across all business activities, so all turnover of an entrepreneur – whether generated in a commercial operation, in agriculture and forestry, in a self‑employed activity or from renting and leasing – is added together. Only certain transactions or ancillary dealings, such as business transfers, are excluded from the calculation of the threshold.
If the small‑business threshold is exceeded by no more than 10 % in a year (up to EUR 60,500), the VAT exemption remains in force until the end of that year, but it will not be applicable in the following year (switch to regular taxation). If the EUR 55,000 limit is exceeded by more than 10 % in the current year, the exemption ceases immediately at the moment of the excess. From that turnover onwards, invoices must be issued with VAT. A retroactive correction for the whole year is not required (no subsequent amendment of invoices necessary).
For farmers who use the flat‑rate scheme, the annual turnover relevant to the small‑business threshold can be assessed at 150 % of the standard value. In addition, all extra income not covered by the flat‑rate scheme, in particular agricultural side activities, is added.
VAT flat‑rate scheme and regular taxation
Agricultural and forestry enterprises with an annual turnover above EUR 600,000 are subject to regular VAT taxation. With an annual turnover below EUR 600,000, the VAT flat‑rate scheme applies, under which farmers may charge and retain 10 % or 13 % VAT but have no entitlement to deduct input tax. There is, however, the possibility to opt into regular taxation, which in that case entails certain binding effects and record‑keeping obligations.
If a farmer wishes to opt voluntarily into regular taxation and is also a small‑business operator, he must, in addition to the regular‑tax option, waive the application of the small‑business exemption ("double option"). This decision binds the entrepreneur for five years.
Non‑flat‑rate side activities
In the area of the agricultural VAT flat‑rate scheme the small‑business exemption described above is irrelevant. However, where turnover does not fall under this VAT flat‑rate scheme, for example from the rental of holiday apartments without ancillary services (rental and leasing) or from horse keeping, the small‑business exemption does play a role and the turnover from those activities must therefore be taken into account.
If the small‑business threshold is exceeded by no more than 10 % in a year (up to EUR 60,500), the VAT exemption remains in force until the end of that year, but it will not be applicable in the following year (switch to regular taxation). If the EUR 55,000 limit is exceeded by more than 10 % in the current year, the exemption ceases immediately at the moment of the excess. From that turnover onwards, invoices must be issued with VAT. A retroactive correction for the whole year is not required (no subsequent amendment of invoices necessary).
For farmers who use the flat‑rate scheme, the annual turnover relevant to the small‑business threshold can be assessed at 150 % of the standard value. In addition, all extra income not covered by the flat‑rate scheme, in particular agricultural side activities, is added.
VAT flat‑rate scheme and regular taxation
Agricultural and forestry enterprises with an annual turnover above EUR 600,000 are subject to regular VAT taxation. With an annual turnover below EUR 600,000, the VAT flat‑rate scheme applies, under which farmers may charge and retain 10 % or 13 % VAT but have no entitlement to deduct input tax. There is, however, the possibility to opt into regular taxation, which in that case entails certain binding effects and record‑keeping obligations.
If a farmer wishes to opt voluntarily into regular taxation and is also a small‑business operator, he must, in addition to the regular‑tax option, waive the application of the small‑business exemption ("double option"). This decision binds the entrepreneur for five years.
Non‑flat‑rate side activities
In the area of the agricultural VAT flat‑rate scheme the small‑business exemption described above is irrelevant. However, where turnover does not fall under this VAT flat‑rate scheme, for example from the rental of holiday apartments without ancillary services (rental and leasing) or from horse keeping, the small‑business exemption does play a role and the turnover from those activities must therefore be taken into account.