Preparing an EÜR: The Income-Surplus Account, Step by Step
Revenue in. Expenses out. The rest is your profit. The EÜR method doesn't require a balance sheet, but it still has a few quirks: What matters is when the money changes hands, not when the invoice is issued.
Under the EÜR method, profit is calculated as the excess of operating income over operating expenses (Section 4(3) of the Income Tax Act (EStG)). It is used by anyone who is not required to keep books and does not keep books, such as freelancers and business owners with annual revenue below €800,000 and profit below €80,000. What counts is when the money changes hands. The EÜR form is submitted electronically.
- Profit is the excess of operating revenue over operating expenses (Section 4(3) of the Income Tax Act), but it is not simply money in minus money out: fixed assets are depreciated, transitory items are excluded, and real estate and securities are only recognized upon sale.
- Business owners must switch to the accounting system when the tax office notifies them that their revenue exceeds €800,000 or their profit exceeds €80,000 (Section 141 of the German Fiscal Code [AO]); they may revert to the previous system only after the tax office has determined that these thresholds are no longer met.
- The date of payment is decisive. Recurring payments that are due and paid within ten days of the turn of the year are counted as part of the year to which they belong (Section 11 of the Income Tax Act).
- VAT payments are business expenses; refunds are business income; with a permanent extension, the advance payment for December counts toward the tax year.
- The EÜR schedule is submitted electronically to the tax office (Section 60(4) EStDV); there is no informal profit calculation or amount limit for this.
Who is allowed to use the income-surplus method of accounting?
The EÜR is a simplified method of calculating profits. It is available to anyone who is not required to maintain accounting records or prepare regular financial statements and who does not keep such records (Section 4(3) of the Income Tax Act (EStG)). Such an obligation may arise from other laws (Section 140 of the German Fiscal Code (AO)) or from tax law itself (Section 141 AO).
Freelancers are not covered by Section 141 of the German Fiscal Code (AO). They may therefore use the simplified income-expense accounting method (EÜR), but are not required to do so: Keeping financial statements is an optional alternative. The choice is determined by actual conduct, not by a declaration: Anyone who voluntarily keeps books and prepares financial statements forfeits the right to use the EÜR. For business owners, Section 141 of the German Fiscal Code (AO) applies as soon as the tax office determines that revenue in a calendar year exceeds €800,000 or that profit for a fiscal year exceeds €80,000. Exactly €800,000 does not trigger this requirement. The accounting requirement begins with the fiscal year following the notification (§ 141(2) AO).
The obligation does not end automatically if you fall back below the thresholds. It ends only at the end of the fiscal year following the year in which the tax office determines that the requirements are no longer met. Until then, you cannot revert to the simplified income statement (EÜR). Anyone who takes over an entire business subject to accounting requirements is subject to this requirement from the very first day, without the need for a new notification.
Bookkeeping Requirements for Business Owners Under Section 141 of the German Fiscal Code (AO)
- €0 to €800,000 in revenue and €80,000 in profitEÜR is possible
Neither limit has been exceeded. The simplified accounting method remains permissible as long as there is no other accounting requirement.
- more than €800,000 in revenue or more than €80,000 in profitAccounting Based on Reporting
The tax office notifies the taxpayer of this obligation. It takes effect as of the following fiscal year and does not end until the tax office has determined that the obligation no longer applies.
How does the EÜR work in practice?
You keep a list: what came in, what went out. The difference is the profit on which income tax is calculated. Not the tax itself, but the basis for calculating it.
But it’s not quite that simple. The law makes four exceptions to the “money in minus money out” principle (Section 4(3) of the Income Tax Act).
Four Exceptions to the Payment Principle
- Transitory Items: Any income or expenses you receive or incur on behalf of and for the account of another person are excluded.
- Depreciation: The rules for low-value assets, the lump-sum allowance, and the deduction for wear and tear also apply here. A fixed asset is not deducted in the year of payment.
- Non-depreciable assets: You may not deduct the costs of non-depreciable fixed assets, shares in corporations, securities, and comparable receivables and rights, as well as land and buildings classified as current assets, until the proceeds from their sale are received or you withdraw them from the business. So, if you buy real estate or securities, you do not deduct anything until you sell them.
- Lists: Fixed assets and the current assets mentioned above must be recorded in special, continuously updated lists, indicating the date of acquisition or production and the acquisition or production costs.
The EÜR in Six Steps
Collect revenue
Record all operating revenue for the year upon receipt of payment, excluding transitory items.
Allocate Expenses
Record all business-related expenses after payment has been made and keep them separate from personal expenses.
Record Depreciation
Depreciate major purchases over time rather than all at once, unless the law allows for immediate depreciation.
Maintain directories
Keep a record of fixed assets, the current assets listed above, and low-value assets costing more than €250, noting their acquisition date and acquisition cost on an ongoing basis.
Fill out the EÜR form
Transfer revenue, expenses, and depreciation to the lines in the schedule.
Submit electronically
Submit the EÜR schedule along with the tax return to the tax office via electronic data transmission.
Sample Calculation: A Photographer's Mini-EÜR (as of October 2026)
- Sole proprietorship, small business exemption—meaning no VAT is included in the amounts.
- All amounts were paid during the year.
- Business expenses excluding depreciation: rent, software, travel expenses, insurance.
- A set of camera equipment purchased in a previous year is being depreciated.
| Operating revenue | €48,000 |
| Operating Expenses Excluding Depreciation | − €9,500 |
| Depreciation (AfA) | − €1,200 |
| Profit | €37,300 |
Income tax amounts to €37,300, including other income. The €1,200 depreciation is considered a business expense, even though the camera was paid for in a previous year.
What do "inflow" and "outflow" mean?
Revenue is recognized in the year you receive the money, and an expense is recognized in the year you pay (§ 11 EStG). The date of the invoice does not matter. If you issue an invoice in December and are paid in January, the income is recognized in January. Income is deemed to have been received as soon as you gain economic control over it, generally upon the fulfillment of the service or the ability to bring it about.
That is the main difference from the balance sheet. The balance sheet also includes receivables and liabilities and compares the business assets at the end of the year with those of the previous year (Section 4(1) of the Income Tax Act). The simplified income statement (EÜR) only considers the bank account and cash on hand.
A special rule applies to prepayments for a period of use exceeding five years: The expense is allocated evenly over the period (Section 11(2), third sentence, of the Income Tax Act (EStG)).
What is the 10-day rule?
Recurring payments made shortly before or shortly after the turn of the year are attributed to the year to which they economically belong (Section 11(1), second sentence, and (2), second sentence, of the Income Tax Act (EStG)). This is the exception to the payment principle, not the rule. The definition of “short period” is not specified in the law itself, but in the official guidelines: generally up to ten days, that is, from December 22 through January 10.
The payment must be due and made within this period. It is not sufficient to simply pay within the ten days. Whether the due date falls within the old year, however, is irrelevant. The same applies to expenses.
Typical examples: the December rent, which is paid on January 3, or the VAT advance payment for December.
Example: VAT for December
Unless an extension is granted, the advance tax return for December is due on January 10. If it is paid on January 8, the payment counts as a business expense for the previous year. The Federal Fiscal Court ruled on this case on June 27, 2018 (X R 44/16).
With a permanent extension, the due date is postponed by one month. It then no longer falls within the ten-day period, and the payment is considered part of the payment year, even if it is made earlier.
If January 10 falls on a Saturday, Sunday, or holiday, the due date is extended to the next business day. The payment will count toward the previous year only if it was made within the ten-day period.
What counts as operating revenue?
Business income includes all inflows generated by the business: fees, sales proceeds, and commissions. This also includes the personal use of business assets, such as a company car. This increases income as a withdrawal.
The following applies to VAT: Anyone who charges VAT must report their net revenue, listing the VAT collected and the VAT refunded by the tax office separately as additional revenue. Small business owners enter their revenue on a separate line and calculate it excluding VAT. This is how it is described in the ELSTER instructions for Form EÜR 2025.
What counts as a business expense?
Business expenses are expenditures incurred in the course of business operations (Section 4(4) of the Income Tax Act). The key requirement is that the expenditure be business-related; it is not necessary for the expenditure to have been unavoidable.
Certain items are not tax-deductible, even though they are business expenses (Section 4(5) of the Income Tax Act (EStG)): excessive entertainment expenses, certain gifts, fines, and trade tax. Entertainment expenses are deductible at only 70%. VAT paid to the tax office and input tax paid are business expenses and are listed on separate lines in the EÜR schedule.
Personal expenses do not belong in the EÜR. If an expense is used partly for personal and partly for business purposes, it should be broken down according to the business portion.
How are depreciation expenses handled in the EÜR?
You generally depreciate purchases that are used for more than one year over their useful life. Instead of making a payment each year, you claim a portion of the acquisition cost (depreciation deduction, AfA). Non-depreciable assets, such as real estate, are only recognized upon sale or withdrawal (§ 4(3) EStG).
There are special rules for small purchases. You can fully deduct low-value assets up to €800 in the year of purchase. Alternatively, assets valued between €250 and €1,000 can be amortized over five years as a lump-sum item (one-fifth per year). The acquisition costs are compared excluding deductible input tax: Those who can deduct input tax calculate the net amount; those who cannot, such as small business owners, calculate the gross amount.
Items costing more than €250 must be recorded in a special, continuously updated register, along with their date of purchase and purchase price. Under the EÜR method, this register must always be maintained because this information is not derived from the accounting records. If it is missing, an audit may invalidate the immediate deduction.
For computer hardware, operating systems, and application software, a useful life of one year may be assumed. There are no objections if the full amount of depreciation is taken in the year of acquisition. This is not an immediate write-off: Depreciation begins at the time of purchase, the equipment must be included in the inventory, and you may also specify a different useful life.
For details, see the article on GWG and miscellaneous items.
One year of use: which devices?
| Group | Recorded |
|---|---|
| Computer hardware (exhaustive list) | Computers, desktop computers, notebook computers (including tablet computers and devices without a physical keyboard), desktop thin clients, workstations, docking stations, external storage and data processing devices, external power supplies |
| Peripheral Devices (Examples) | Input: Keyboard, mouse, graphics tablet, scanner, camera, microphone, headset. Storage: Hard drive, drive, memory stick, tape drive. Output: Projector, plotter, speakers, monitor, printer |
| Software | Business and user software, including inventory management and enterprise resource planning software, as well as applications tailored to individual users |
| Not recorded | Smartphone: not a laptop and not a peripheral device, and this list of computer hardware is exhaustive |
As of October 2026.
How does the EÜR system work?
The EÜR Schedule is the official form into which the figures from the EÜR are entered. There is a separate schedule for each business. It is submitted electronically via data transmission (Section 60(4) EStDV). Upon request, the tax office may waive the requirement for electronic transmission to avoid undue hardship; in such cases, an official paper form applies.
There is no such thing as an informal profit calculation, nor is there a threshold amount below which it would be sufficient. The only alternative to electronic filing is the official form, and that is available only upon request in cases of undue hardship.
The attachment is sent to the tax office along with the income tax return.
Common Sources of Error
- Invoice date used instead of payment date
- VAT prepayment for December posted to the previous year despite the permanent extension of the filing deadline
- VAT payments or refunds from the tax office not recorded
- Personal and business funds mixed in one account; withdrawals and deposits not recorded
- Purchases exceeding €800 (excluding deductible input tax) are recognized in full as an expense
- No inventory is maintained for fixed assets and low-value assets costing more than €250
- Documents not retained: Books and records for ten years; accounting documents created today for eight years; business letters for six years; the retention period begins at the end of the calendar year (Section 147 of the German Fiscal Code (AO))
Store and Scan
The retention period does not expire as long as the documents are relevant for tax purposes and the assessment period has not yet expired. If an audit is underway or proceedings are pending, you must continue to retain the supporting documents, even if the retention period has expired.
Scanning is permitted. For receipts and incoming letters, the scanned copies must match the originals visually; for other documents, they must match the originals in content. They must be available for the entire retention period and must be readable and machine-processable at any time. Only annual financial statements and the opening balance sheet must be retained in their original form. Anyone who uses the simplified cash basis method may therefore scan everything.
Quick question, quick answer.
Do I need a business bank account?
No, Section 4(3) of the Income Tax Act (EStG) does not require a separate account, nor is there any obligation under commercial law for sole proprietors to maintain one. However, the records must be organized, and each receipt must be traceable individually. A separate bank account is the most practical way to achieve this, because withdrawals and deposits appear separately in the EÜR schedule.
What is the difference between this and the balance sheet?
The balance sheet compares business assets at the end of the year with those of the previous year and also includes receivables and liabilities (Section 4(1) of the Income Tax Act). The EÜR method considers only payments made during the year (Section 4(3) of the Income Tax Act).
Can I do the EÜR myself?
Yes. The EÜR is a statement of income and expenses; you fill out the EÜR form yourself and submit it electronically (Section 60(4) EStDV). If a specific case raises questions, the tax office will provide a binding answer.
When do I need to start keeping books?
Business owners, if the tax office notifies them that their revenue exceeds €800,000 or their profit exceeds €80,000 (Section 141 of the German Fiscal Code [AO]). This requirement takes effect in the fiscal year following the notification and does not end automatically; rather, it ends only after the tax office issues a final assessment, with a one-year grace period. Self-employed professionals are not subject to this rule.
How long do I have to keep my receipts?
Accounting documents created today must be retained for eight years; books and records for ten years; and business letters relevant for tax purposes for six years. The retention period begins at the end of the calendar year in which the document was created (Section 147(1), (3), and (4) of the German Fiscal Code (AO)). It does not expire as long as the documents are relevant to a tax assessment for which the assessment period is still open. Scanning is permitted.
Does the VAT advance payment for December count toward the previous year?
Without a permanent extension, yes—if you pay it by January 10, because then it is due and paid within the ten-day period. With a permanent extension, no: The due date is one month later and thus outside the ten-day period; the payment belongs in the tax year.
Sources & Legal Basis
- Income Tax Act, § 4 Definition of Profit – § 4 EStG (08.10.2026)
- Income Tax Act, Section 11: Collection and Disbursement – § 11 EStG (08.10.2026)
- Tax Code, § 140: Accounting and Record-Keeping Requirements Under Other Laws – § 140 AO (08.10.2026)
- Tax Code, § 141: Bookkeeping Requirements for Certain Taxpayers – § 141 AO (08.10.2026)
- Tax Code, § 147: Regulations Governing the Retention of Documents – § 147 AO (08.10.2026)
- Income Tax Implementation Regulation, § 60: Documents for the Tax Return – § 60 EStDV (08.10.2026)
- Federal Finance Court, Judgment of June 27, 2018, X R 44/16 (Press Release No. 054/18) – BFH X R 44/16 (08.10.2026)
- ELSTER, Guide to the EÜR 2025 – Verfahrenshinweis (08.10.2026)
Change History
- October 8, 2026Post created (draft).
- October 9, 2026Technical review incorporated.
This article is intended to provide general information and does not constitute tax advice for specific cases. For binding information, please contact your local tax office.
Reviewed by expertsSven Schilling
Tax expert- Bachelor of Business Administration (University of Applied Sciences)
- Over 30 years of experience in accounting and tax firms
- Board Member of an Income Tax Assistance Association
Reviewed on October 8, 2026. If there are any changes to the law, this post will be reviewed again.
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