Subletting a movement space
January 25, 2011 | 30,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
The main tenants of a movement space want to sublet it by the hour to other course instructors (mostly small business owners). In the commercial lease agreement for this space, the landlord has opted for sales tax, which is why the main tenants are obligated to report taxable income. Do the sublease agreements with the course instructors now have to show sales tax, and do the respective subtenants also have to be subject to sales tax? Or is it sufficient to remit the sales tax from the sublease income to the tax office? Is it possible to sublet the space to small business owners contrary to the opinion of the tax advisor in the attachment?
I would be very grateful for a prompt response!
Dear inquirer,
Thank you for your inquiry, which I would like to answer based on your information and in the context of your commitment in the framework of an initial consultation as follows:
I agree with the tax advisor's opinion as per his written statement.
The landlord has waived the option for tax exemption under § 4 No. 12 UStG by opting for regular taxation. An option by the landlord towards you would not be possible if you, as the tenant, are not fully entitled to input tax deduction regarding the VAT invoiced to you for the use of the premises (see Law to Combat Abuse and Clean Up Tax Law of 21.12.1993 BStBl. 1994 I p. 50). If you now sublet premises without VAT, you are not fully entitled to input tax deduction, which has a negative impact on the landlord's option. Since a small business owner is NOT entitled to input tax deduction, you should not rent to a small business owner who is subject to VAT. Therefore, the small business owner would also have to opt for regular taxation and waive the application of § 19 UStG (small business regulation).
I regret not being able to provide you with a more positive answer, but I hope I have still been able to help you.
Best regards,
Ulrich Stiller
Tax Advisor / Diplom Business Economist
