Renting out equipment as a freelancer: VAT, depreciation and deposits

Renting out is a service at 21 per cent VAT

Renting out movable property, so anything not fixed to a building, is taxed at 21 per cent VAT. That applies to tools, machines, trailers, sound equipment, cameras and marquees. There is no reduced rate for rental, not even if the item itself would fall under 9 per cent when sold.

If you rent to a business in another EU country with a valid VAT number, you reverse-charge the VAT, just as with your ordinary services. Renting to private customers abroad follows different rules per situation; see VAT with clients abroad. Renting out a room or building is something else entirely: that is in principle exempt from VAT.

Your asset starts working harder

A machine you use yourself and also rent out remains one asset on your balance sheet. You depreciate it over its useful life, and the rental income is revenue. If you rent it out heavily it wears faster: you may adjust your depreciation period accordingly, provided you can substantiate it. The rules are in depreciation and capitalise or deduct at once.

If you buy items specifically to rent out, those are ordinary investments counting towards the investment deduction once you pass € 2,900 in a year. Note though: assets mainly intended to be made available to third parties are excluded from that deduction. If you rent out occasionally alongside your own use, that does not apply; if renting is your main activity, check before claiming the deduction.

Deposits, damage and insurance

A deposit you receive and repay afterwards is not revenue: it is the renter's money held temporarily. So no VAT applies and it does not belong in your profit. If you keep the deposit because something is broken, that changes: the amount then compensates damage, which as a rule carries no VAT. See booking damages and insurance payouts.

Check your insurance before renting out. Many policies do not cover damage to your own equipment once someone else is using it, and your liability insurance does not automatically cover damage the renter causes with your kit. Record in your rental terms who is liable for what and what happens if items come back late. See business insurance and terms and conditions.

Renting out through a platform

If you rent out through a platform, that platform usually withholds a commission and pays you the rest. Your revenue is the whole amount the renter pays, not what lands in your account: the commission is a cost. Platforms also report data on sellers and renters to the tax authorities, so your income is known. See selling through platforms and tax.

If you only occasionally rent out your own private belongings, that does not make you a business; the proceeds can remain untaxed and the items stay private. Do it structurally, with listings, fixed rates and several renters, and it is simply a source of income. Where that line runs is covered in from side income to business.

Frequently asked questions