Soll- oder Ist-Versteuerung? Umsatzsteuer und Liquidität steuern

You issue an invoice, but your customer only pays weeks later – and yet you're expected to hand the VAT to the tax office already? That's exactly what accrual taxation (Soll-Versteuerung) demands. There's another way: with cash-based taxation (Ist-Versteuerung) under Section 20 UStG, you only owe the VAT once your customer has actually paid. For your liquidity, that can make a real difference. This article explains how both methods work, which thresholds apply in 2026 and when applying for cash-based taxation is worth it.

Accrual vs. cash-based taxation: the core difference

Both methods concern only one thing: the point in time at which the VAT arises and therefore enters your VAT return. How much VAT you pay overall does not change – only when you remit it.

• Accrual taxation (based on agreed consideration): the VAT arises at the end of the return period in which you performed the service and issued the invoice – regardless of whether your customer has paid yet. This is the statutory default.
• Cash-based taxation (based on collected consideration): the VAT only arises at the end of the return period in which the money has actually reached you.

Rule of thumb: with accrual taxation the invoice counts, with cash-based taxation the payment receipt counts.

Why the difference matters for your liquidity

The accrual default can force you into pre-financing: you've delivered, the invoice is out, but your customer takes their time paying. Even so, you have to remit the VAT shown on the invoice with your next return. You're advancing money you haven't even received yet.

With cash-based taxation, this problem doesn't arise: as long as your customer hasn't paid, you don't have to remit the VAT. Especially with long payment terms, large invoice amounts or late-paying customers, this noticeably protects your cash flow.

Example: the liquidity effect

Sarah is a graphic designer and issues an invoice on 20 September for 10,000 euros net plus 1,900 euros VAT. Her customer only pays on 5 November. Under accrual taxation, Sarah would have to remit the 1,900 euros with the September return (due in October) – before she has the money. Under cash-based taxation, she only owes the VAT in November, when the payment has arrived. She doesn't have to pre-finance anything.

Who may use cash-based taxation?

Cash-based taxation is not automatic; it has to be applied for at the tax office. Under Section 20 UStG, you can use it if you meet one of the following conditions:

• Your total turnover in the previous calendar year did not exceed 800,000 euros, or
• you are exempt from the obligation to keep double-entry books (and don't prepare a balance sheet), or
• you earn turnover from an activity as a freelancer (Freiberufler) within the meaning of Section 18 (1) No. 1 EStG.

The last point is key: freelancers – for example doctors, lawyers, journalists, designers or consulting engineers – can apply for cash-based taxation regardless of their turnover, provided they determine their profit via a cash-basis income statement. For them, there is no turnover ceiling.

Good to know: the turnover threshold for cash-based taxation was raised by the Growth Opportunities Act (Wachstumschancengesetz) from 600,000 euros to 800,000 euros – and this already applies for tax periods from 2024. As a result, more businesses can benefit from the rule.

How to apply

The application for cash-based taxation is informal. You can submit it in writing to the tax office; for a new business, you usually indicate the choice in the tax registration questionnaire. It makes sense to apply for cash-based taxation before the start of the year from which it should apply, so that it covers the whole year. The tax office approves cash-based taxation by a corresponding notice – only then may you apply it.

Input VAT deduction: an important difference

One point is often overlooked: the two methods concern your output turnover, i.e. the VAT you owe yourself. For the input VAT deduction from incoming invoices, the same principle applies to both methods: you may claim the input VAT as soon as the service has been performed and you have a proper invoice. So you don't have to wait until you've paid your supplier's invoice. With cash-based taxation, this results in a double liquidity advantage for many: VAT only on payment receipt, but input VAT already on receipt of the invoice.

Pros and cons at a glance

	Accrual taxation	Cash-based taxation
VAT arises on	invoicing/performance	payment receipt
Pre-financing needed?	yes, with late payment	no
Application required?	no (default)	yes
Turnover threshold	none	800,000 € (freelancers: none)

One disadvantage of cash-based taxation is the slightly higher effort in allocation: you have to record turnover by actual payment receipt, not by invoice date. With cleanly kept digital bookkeeping, however, this barely matters. If you exceed the 800,000-euro threshold, you have to switch back to accrual taxation the following year.

Time your VAT cleverly – we'll help

Whether switching to cash-based taxation is worth it for you depends on your customer structure, your payment terms and your turnover. At Buchführungsheld, real bookkeepers check which method suits your business, submit the application for you if needed and make sure your turnover lands in the correct return period. You just upload your receipts – we handle the rest at a fixed price. If you want to know whether cash-based taxation would improve your liquidity, book a free initial consultation and we'll look at your situation together.

Frequently asked questions

What is the difference between accrual and cash-based taxation?

With accrual taxation, the VAT arises as soon as you've performed the service and issued the invoice. With cash-based taxation, it only arises when your customer has actually paid. The total amount of tax is the same, only the timing of remittance differs.

What is the turnover threshold for cash-based taxation in 2026?

It is 800,000 euros total turnover in the previous calendar year. This threshold has applied since the 2024 tax period, after it was raised from 600,000 euros by the Growth Opportunities Act. Freelancers can apply for cash-based taxation regardless of their turnover.

Do I have to apply for cash-based taxation?

Yes. Accrual taxation is the statutory default. You have to apply informally for cash-based taxation at the tax office, which approves it by notice. It makes sense to apply before the start of the year from which the rule should apply.

Does cash-based taxation change anything about the input VAT deduction?

No. You can claim the input VAT from your incoming invoices under both methods as soon as the service has been performed and you have a proper invoice – regardless of whether you've already paid the invoice.