Stabilitätsgesetz 2012 (StabG 2012) – Umsatzsteuer und Vorsteuerabzugsberechtigung bei Vermietung ab 01.04.2012

There are significant changes in the Stability Law 2012 regarding the possibility of renting of business premises subject to VAT and also of the landlord’s entitlement to deduct.

In principle, the renting (leasing) of property is subject to the spurious tax rate of 0%. As no VAT is payable, there is thus simultaneously is no entitlement to deduct VAT.

The rental of (i) land for residential purposes, (ii) machines and other equipment of all kinds (even if they are part of a property), (iii) accommodation, (iv) rental of parking spaces (garages) and (v) of land for camping purposes are excluded from this exemption. These are subject to a tax rate of 10%.

Therefore, this means that the rental of commercial space is not subject to VAT and thus there is no tax deduction. Pursuant to Section 6(2) of the Value Added Tax Act 1994 (VAT), businesses can also treat the rental of commercial space as subject to VAT (VAT opt in). Until now it was possible to rent business premises without restriction.

The Stability Act 2012 introduces a significant restriction for this opt in possibility which is to be noted in the rental of business space. The waiver of the exemption should only be allowed from 01.04.2012 as long as the tenant in the rental property is an almost taxable person, which would not exclude the entitlement to deduct. “Almost” exclusivity should then be given “if a maximum of 5%the VAT attributable to the rent for the property/land can be deducted” (according to the explanations and comments of the Stability Law 2012). The renting business is obliged to demonstrate this requirement accordingly.

We therefore recommend that existing contracts already concluded include a provision (duty of disclosure and accountability of the tenant) so as to enable the landlord to fulfil their legal obligations.

Additionally, the contract should also provide for those cases where the requirement of the opt in possibility ceases to exist at a later date.

The new regulation applies to rental and lease agreements provided that construction of the building by the contractor started after 01.04.2012 (beginning with the actual construction work on the basis of planning permission).

Residential properties that were acquired after 31.03.2012 as well as the rental of owner-occupied blocks as long as the rental commenced after 31.03.2012 also fall within the scope of the new rules of the Stability Law 2012.