Umlaut domains or IDN domain names (Internationalized Domain Names) are domains, whose names contain special characters (e.g. German umlauts).
Name servers can't deal with special characters (a special character is everything which doesn't occur in the English alphabet) themselves. To enable domain names with special characters they are converted in a special way to a domain name consisting only of ASCII characters. To mark this domain name as umlaut domain it is assigned the prefix xn--. The so tagged domain will be displayed to you and registered during the ordering process.
küchenspezialist.com --> xn--kchenspezialist-vzb.com
Umlaut domains are possible at EUserv. Apart from German umlauts all accent characters as well as the ß are permitted.