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A couple who booked a meeting with me were not sleeping at night because they had been doing more than R1m a year turnover from their two multi-unit AirBnB premises and they weren’t VAT registered.

What does the law say about this?

  • As soon as you exceed R1m a year VATable turnover, you must register as a VAT vendor. If you don’t, SARS may deem you to have done so and demand the VAT portion of all your invoices, even if you didn’t add VAT. This is what they were panicking about.
  • The good news for them was, in my view, that the simple letting of residential accomodation is not VATable, so their VATable turnover was zero. However, I must emphasise that the legislation is open to various interpretations and I am not senior council.
  • I did recommend that the client phoned SARS and asked what their view was.
  • Residential accomodation does become VATable if dometic services, such as cleaning, washing, ironing, meals, entertainment etc. are included in the price. This is commonly the case with boarding houses, guest houses, retirement homes, frail care homes etc. (s1 VAT Act Definition – commercial accomodation)

There has been some debate about this article and the matter is by no means settled. If anyone comes up with a legal case that finally settles this matter, I would really appreciate their commenting on the article with a reference to the case. The closest that I can find is the Respublica (Pty) Ltd vs SARS case number 864/2014 as discussed in detail by SAICA in their December 2016 issue of Accountancy South Africa. A full transcript of this opinion is to be found in my book “16 Steps to Wealth”.

Respublica entered into a 5 year lease agreeement with a university which then rented out the individual units to students.

Respublica provided water and electricity, maintenance, management of the building, a common TV room and laundry services. The court found that the supply was of commercial accomodation and was subject to VAT. However, the court was not required to conclude whether the agreements between the university and the students was subject to VAT, but SAICA concludes that this would not be the case, which supports my argument.


  1. Not sure why you don’t think airbnb falls in here:

    “commercial accommodation” means-
    (a) lodging or board and lodging, together with domestic goods and services, in any house, flat,
    apartment, room, hotel, motel, inn, guest house, boarding house, residential establishment,
    holiday accommodation unit, chalet, tent, caravan, camping site, houseboat, or similar
    establishment, which is regularly or systematically supplied but excluding a dwelling supplied in
    terms of an agreement for the letting and hiring thereof.

    I’ve never heard of an AirBNB that doesn’t include furniture (domestic goods) and cleaning before and after (services).

    Especially if you’re running 2 multi-unit premises. That sounds quite a lot like a hotel to me.

    1. Hi Carl,
      This is a tricky bit of legislation as I’m sure you agree. I spent a lot of time recently reading the Act with a client on Zoom and that’s when I drew my conclusions. I need to re-visit the Act before I can respond to you. So, I’ll be back shortly.

      1. Hi Carl,
        I have edited and added to the article and, I hope, added some clarity to this issue. There is no doubt that there is room for interpretation – a gap that should be closed by legislation.

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