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VAT on "short term" rentals

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Is there such a thing? I remember hearing of a friend of mine having to pay VAT on her rental income derived from a flat in Berlin because of renting for a short period (3 months I think) but I don't seem to find anything to confirm this.

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7% VAT is due on short-time (= kurzfristige) rentals, see §12 Nr. 11 UStG:

(2) Die Steuer ermäßigt sich auf sieben Prozent für die folgenden Umsätze:

11.
die Vermietung von Wohn- und Schlafräumen, die ein Unternehmer zur kurzfristigen Beherbergung von Fremden bereithält, 

Any rental period under 6 months counts as "kurzfristig", see section 4.12.3 Absatz 2 UStAE.

 

But most people will be Kleinunternehmer, i.e. have a turnover of up to 17,500€ a year and will therefore not have to charge any VAT, in accordance with §19 UStG.

 

Your friend most probably had to pay VAT because she was a VAT-charging self-employed. If you are VAT charging in one area (whatever she does self-employed professionally), you cannot get Kleinunternehmer status in another area (rentals).

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Thanks Panda! As usual, cleared all my doubts.
Yes my friend is a freelancer and charges VAT, so that makes sense. 

 

11 hours ago, PandaMunich said:

But most people will be Kleinunternehmer, i.e. have a turnover of up to 17,500€ a year and will therefore not have to charge any VAT, in accordance with §19 UStG.

 

This leads to a new doubt though: would rental income add to professional income in terms of Kleinunternehmer status? 
I am a Kleinunternehmer since I'm way below the threshold with my professional income but would I have to consider the rental income as well in that calculation? 

I hope the question makes sense. 

 

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Yes, so it could take you over the Kleinunternehmer limit and you would then have to charge VAT on all your activities.

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Ah that's annoying. I will have to talk about this with my accountant then. Thanks for the clarification! 

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Just adding this here to make sure we end the thread with the right info for everyone else: my accountant says that income from long term rentals doesn't apply to the Kleinunternehmer limit calculations since it's VAT free. So all the short term rentals would add up to my professional income but the long term ones don't.  

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On 5/18/2017, 10:25:26, stevekerr said:

Just adding this here to make sure we end the thread with the right info for everyone else: my accountant says that income from long term rentals doesn't apply to the Kleinunternehmer limit calculations since it's VAT free. So all the short term rentals would add up to my professional income but the long term ones don't.  

 

Can this really be correct?  Wouldn't it mean that if somebody theoretically had 10 properties and was making say 5000 eur per month profit...  but operated his 'main business' as Kleinunternehmer under the 17,500 limit... he would not have to be VAT registered?

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It is correct, but unfortunately you didn't understand it correctly.

 

All your turnovers that fulfil both of the following conditions:

  1. it is not exempted from VAT and
  2. the "location" of the turnover is Germany (this is decided according to VAT law, which is the same throughout the EU, the European Commission saw to that)

get added up, and if the sum exceeds 22,000€ a year, you are not a Kleinunternehmer.

 

If you have short-term lets in Germany (which means a VAT "location" of Germany) that bring in 5,000€ a month, then your yearly turnover from short-term lets alone is 60,000€, so you would lose Kleinunternehmer status (if you ever had it) and would have to charge VAT and forward that VAT to the Finanzamt.

 

If these short-term lets are in another country, then their VAT "location" is in that other country and you would have to consult a tax adviser from that country to find out how much VAT you would have to pay to that country's tax coffers on your turnover from these short-term lets. But they wouldn't make you lose Kleinunternehmer status in Germany.

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Ok I see.  But specifically I meant on long-term lets (in Germany), as they are apparently VAT exempt.  So if someone was renting out a number of properties long-term, plus ran a small business under the Kleinunternehmer limit, they would still be considered Kleinunternehmer.  Is that correct?

 

(Not that I am fortunate enough to be in that situation, but it is an interesting learning perhaps for the future.)

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On 5/16/2017, 9:53:42, PandaMunich said:

Any rental period under 6 months counts as "kurzfristig", see section 4.12.3 Absatz 2 UStAE.

 

 

Thanks for the info.

 

Having problems opening that link (seems to be a huge PDF), but will take a look in time.  In the meantime, there were two things I wanted to double check.


1) Is it specifically less than 6 months which counts as kurzfristig?  What about a contract for exactly 6 months?  I assume that is not kurzfristig, but just wanted to double check.

 

2) What if you offered someone a long term contract, but they terminated the contract and moved out early?  I assume you don't have to pay VAT retroactively?

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A12.16 (1) UStAE sends you to A4.12.3 (2) UStAE.

Or here's another link to the entire UStAE: http://www.bundesfinanzministerium.de/Content/DE/Downloads/BMF_Schreiben/Steuerarten/Umsatzsteuer/Umsatzsteuer-Anwendungserlass/2016-12-31-umsatzsteuer-anwendungserlass-kosolidierte-fassung-31-12-2016.pdf?__blob=publicationFile&v=2

 

Enjoy.

 

29 minutes ago, audioboy77 said:

1) Is it specifically less than 6 months which counts as kurzfristig?  What about a contract for exactly 6 months?  I assume that is not kurzfristig, but just wanted to double check.

 

Example 1 in A4.12.3 (2) UStAE implies a rule of "under 6 months", example 2 of "up to 6 months" for kurzfristig

 

29 minutes ago, audioboy77 said:

2) What if you offered someone a long term contract, but they terminated the contract and moved out early?  I assume you don't have to pay VAT retroactively?

 

Think again.

 

Beispiel 1:
  1.  
    Eine Campingfläche wird auf unbestimmte Dauer vermietet. Der Vertrag kann monatlich gekündigt werden.
    Die Vermietung ist als langfristig anzusehen und somit steuerfrei. Endet die tatsächliche Gebrauchsüberlassung jedoch vor Ablauf von sechs Monaten, handelt es sich insgesamt um eine steuerpflichtige kurzfristige Vermietung.
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