Most long-term residential rent (Wohnraumvermietung) is VAT-exempt — but commercial property and short-term/holiday lets follow completely different rules.
Last updated: June 2026
If you let residential property (Wohnraumvermietung) on a standard long-term lease, that rental income is exempt from VAT (umsatzsteuerfrei nach §4 Nr. 12 UStG) — you never charge VAT, and this remains true regardless of your portfolio size. The trade-off is that you generally cannot reclaim Vorsteuer on costs related to that exempt letting activity.
Renting out commercial property (offices, retail, warehouses) is also exempt by default, but commercial landlords can formally opt to charge VAT (zur Umsatzsteuer optieren) on a specific property under certain conditions — mainly requiring the tenant to also use the property for VAT-taxable purposes. Once opted, rental income becomes standard-rated at 19%, and the landlord can reclaim Vorsteuer on related costs like renovation and maintenance.
Short-term furnished lettings (holiday apartments, serviced accommodation, Airbnb-style stays) are generally treated as a taxable supply of accommodation, similar to a hotel, rather than exempt residential letting. This means income from qualifying short-term lets counts toward the Kleinunternehmer threshold like any other taxable business activity, and once registered you charge 19% VAT on the accommodation fee (though a reduced 7% rate may apply to certain short-term accommodation — check current rates).
No. Long-term residential rental income is VAT-exempt and doesn’t count toward the Kleinunternehmer threshold, regardless of portfolio size.
Yes. Short-term/holiday letting income is generally treated as taxable and counts toward the threshold, even though your long-term rental income does not.
Generally no, since residential letting is exempt and exempt supplies don’t carry the right to reclaim related Vorsteuer.
A formal election to charge VAT on a specific commercial property going forward, generally requiring the tenant to use the property for VAT-taxable purposes — this is a meaningful decision worth professional advice.
No, it’s the same Kleinunternehmer threshold as any business — most residential rental income simply doesn’t count toward it because it’s exempt.
Enter your revenue and get a plain-English answer in seconds.
Check my VAT status →