d. Income from a trade or business?
If income from business operations is available, the income from renting and leasing (V&V income) is relinquished. This is referred to as “subsidiarity of types of surplus income” (cf. § 21 (3) EStG).
According to § 15 EStG, commercial income exists when an independent, sustainable economic activity is carried out with the intention of making a profit. If there is a commercial activity, the income from V&V (renting and leasing) is “requalified” into commercial income.
The circumstances of the individual case must be taken into account when the limit of commercial viability is exceeded in the case of the occasional letting of residential space. Evidence of this could be a professional organization, high sales or additional services such as breakfast.
Ultimately, it always depends on the overall impression and the answer to the question:
How close are you to a hotel?
Exceeding the trade limit does not only lead to a reclassification of the types of tax within the framework of income tax. In such a case, a trade tax return must also be submitted.
e. Value added tax: reduced tax rate and small business regulation
In most cases, the rental of private apartments is exempt from VAT (cf. § 4 No. 12 S. 1 UStG = VAT Act).
However, as is so often the case in German tax law, there is another exception to this principle. If the letting only takes place at short notice to changing tenants, there is nevertheless the obligation to pay value added tax to the state. Up to now, this exception has mainly concerned the rental of holiday apartments, but will gain economic importance in connection with the shared economy, i.e. Airbnb lettings.
Airbnb rentals are therefore generally subject to VAT!
However, the Value Added Tax Act provides – not surprisingly – for further exceptions. In deviation from the normal rate for value added tax (19 %), a reduced tax rate of 7 % applies to short-term rentals (cf. § 12 (2) No. 11 UstG). Here, however, it must be differentiated again according to whether the invoice was issued for the mere rental or for other services (so-called additional services, i.e. final cleaning, breakfast, etc.).
Fortunately, most Airbnb suppliers are unlikely to be affected by this issue. This is because the VAT issue can be avoided if the total rent received does not exceed 17,500 euros per year (cf. § 19 UStG – so-called small business regulation).
However, sales tax can become problematic if the tax office has not been informed of the sales up to now. It must also be stated on every invoice of a small business owner that the value added tax pursuant to § 19 of the Value Added Tax Act is not shown. If these formal requirements of the small business regulation are not met, a voluntary disclosure must also be considered with regard to value added tax (see 5. below).
f. Bed tax or Kulturförderabgabe (“cultural promotion levy”)
In addition to income tax, sales tax and trade tax, the so-called bed tax must also be taken into account in Airbnb cases.
Bed tax” refers to a cultural promotion tax levied by certain municipalities on the basis of their own statutory law (also known as city tax, accommodation tax or overnight stay tax).
Especially in popular tourist cities such as Berlin, Freiburg, Hamburg or Cologne, this special tax for hotel guests – and also for Airbnb guests – applies to private overnight stays.