Ask a tax advisor on the topic of Sales tax / Turnover tax

The tenant pays the ground rent.

February 10, 2015 | 30,00 EUR | answered by Anton Pernitschka

Dear Sir or Madam,

We have acquired a holiday home that is permanently rented out - initially for 15 years. The condition was that we opt for value added tax and become entrepreneurs. The rent is therefore transferred plus value added tax. O.K.

We are obliged to pay an annual ground lease to the property owner as the right of building land holders. According to the continuous invoicing, we are liable for tax (reverse charge procedure). O.K.

According to the contract under ancillary costs, "the tenant bears the ground lease up to the same amount." The above-mentioned continuous invoice also states that the ground lease, without value added tax, is to be borne by the tenant based on the rental agreement.

Question: As a result of the tenant taking over the ground lease, would additional value added tax and income tax be incurred and how would the value added tax (amount + VAT or tax reversal) be paid?

Thank you!

Anton Pernitschka

Dear inquirer,

In the context of an initial consultation and your fee commitment, while observing the regulations of this forum, I would like to answer your questions.

According to § 4 No. 9 a UStG, the turnover related to real estate transfer tax is exempt from value-added tax. This includes the establishment and transfer of leasehold rights according to UStAE 4.9.1 para. 2 No. 1.

Therefore, no value-added tax is incurred through the assumption of ground rent by the tenant.

Ground rents are considered rental income according to § 21 para. 1 No. 1 EStG. In your case, ground rents increase your rental income.

The response is based on the information provided by you. Missing or incorrect information about the actual circumstances may affect the legal outcome.

Best regards,

Anton Pernitschka
Tax advisor