Tax traps when commissioning foreign construction companies

Hello everyone,

we are planning to have our house in Germany built by an Austrian company. The company often builds in Germany and is authorized to submit building plans in Bavaria.

However, the information on their website unsettles me:
Do I understand correctly that if I own a small apartment and rent it out, I am legally considered a company?
And therefore must independently remit the VAT of the built house to the tax office and may only pay the net amount to the Austrian company. And the company itself does not have to pay any tax?

To make it more complicated: If the house is built and paid for jointly by two people, and one owns the apartment while the other does not, would half the amount have to be paid to the German tax office and the other half by the construction company to the Austrian tax office?

So, owning/renting out an apartment is mere asset management according to constant case law of the BFH. Unless you insist on a business because you want to build 48 more apartments and then establish a company. In that case, it’s simple: the foreign entrepreneur invoices net and you pay the resulting VAT to the German tax office. Both companies must have an identification number.

As a private individual, you can therefore not care at all what the company does with the VAT. To be sure, you have the company show you its (German) tax number and check it. If they don’t have it or don’t show it, stay away.

You are not allowed to post links here, just google "umsatzsteuerpflicht ausländisches unternehmen" and you will find several links, including the IHK Hamburg, where it is described quite clearly.

With an apartment, you are not an entrepreneur. Unless you have founded a company for it.

And even if you were, as an entrepreneur you are allowed to privately build a house, then you are a completely normal consumer.

It is called reverse charge and can be found in § 13b of the German VAT Act. The place of supply is where the property is located (Germany); if the recipient of the service is an entrepreneur (lessor, freelancer, trader, etc.), they must pay the VAT for the foreigner in Germany. It does not matter whether only VAT-exempt supplies are provided by the recipient. I even believe it is sufficient to be a small business owner. Due to the special case "entrepreneur/non-entrepreneur build together," you will surely find something on the internet (or from a tax advisor). I could imagine that this involves a GbR, which is independent for VAT purposes. If the GbR is not an entrepreneur, the reverse charge procedure probably does not apply. However, this should definitely be clarified in advance with a tax advisor.

No, renting out an apartment does not make one an entrepreneur.

Ask the (German) Federal Chancellor, he knows about Cum Ex *LOL*