Phew! This has been a long road.

I am again deeply indebted to the Tax Faculty and specifically to Theloniuos Burrows for his assistance in clarifying this really tricky problem.

The question that I am often asked, in one form or another, is “What is the VAT treatment of a Guest house/AirBnB/Student accommodation/House rental?”

Guest House

The easiest one to deal with is a Guest house because it is specifically mentioned in the definition of “commercial accomodation” in s1 of the VAT Act.

Commercial accomodation is subject to VAT and so, therefore, are guest houses.

There’s a special provision in s10(10) that reduces the VAT rate on commercial accomodation to 60% x the Standard 15% = 9% for the entire stay if it exceeds 28 days.

AirBnB

As AirBnB is typically supplied with domestic goods and services (my italics), it usually falls within the definition of “commercial accomodation” in s1 of the VAT Act and is therefore subject to VAT.

The s10(10) reduction would also apply except that AirBnB is typically short term.

Student accommodation

In most cases, all that is provided is a room with, perhaps, a bed, kettle, TV and the like.

Provided no regular services such as laundry or cleaning are included, this would be classed as residential accommodation and would therefore be exempt from VAT.

House rental

I add this one because 8 years ago we sold our house and have rented our dwellings ever since (see my online book “16 Steps to Freedom”).

If the landlord’s income from such rentals exceeds R1m, should VAT be charged?

The answer lies with the “and” that I italicised above. Sure, domestic goods are often part of the supply, but not “and” services. So, these rentals are residential accomodation by definition and are exempt from VAT.

So there it is at last. Clearly the obligation to charge VAT only arises when the annual supplies exceed R1m.