Non-residential premises

What it means

Non-residential premises are a room or group of rooms in a building intended for purposes other than housing, such as an office, shop, storeroom, surgery, workshop or garage. The designation follows from the occupancy permit and the entry in the land register.

Leasing non-residential premises follows special rules that are more flexible for businesses than residential tenancies. The parties can agree on the rent, term, grounds for termination and conditions for alterations, and tenant protection is weaker than for a flat.

For VAT, leasing non-residential premises is treated like any other property lease: it is in principle exempt, but the landlord may opt to tax it when letting to another VAT payer. Details are covered under property rental and VAT.

How it works in practice

The lease agreement should precisely define the premises, permitted use, rent and service charges, payment arrangements, rent indexation, the security deposit and conditions for handing the premises back. It should also state who pays for repairs and maintenance and whether the tenant may make alterations.

If the tenant wants to let part of the premises to someone else, a sublease requires the landlord's consent. Shared offices and coworking spaces are often contracted as the provision of services, which can have different tax and legal consequences from a classic lease.

For the tenant, rent is a tax-deductible expense. Improvements that the tenant makes to someone else's premises with the landlord's consent can be depreciated by the tenant if the contract allows it. When the lease ends, it should be agreed whether alterations will be removed or the landlord will pay for them.

What to watch out for

Using premises for a purpose other than that stated in the occupancy permit can cause problems with the building authority, insurance and trade licence. Before signing, check whether the premises are approved for the planned activity, such as running a restaurant or manufacturing.

When renting in an apartment building, the tenant also encounters the owners' association rules and charges for common areas. Service charges and their settlement are a frequent source of disputes, so agree a clear calculation method and settlement dates.