The majority of existing building stock in Europe and worldwide is poor energy performance buildings and renovation plays a major role in achieving climate protection and energy independence. Deep renovation solutions in combination with integrated HVAC systems are developed within the framework of the European project iNSPiRe. The development, testing and modelling of a facade integrated micro-heat pump (µ-HP) in combination with mechanical ventilation with heat recovery (MVHR) is presented. A detailed physical model of the µ-HP is developed within the Matlab simulation environment. The vapour cycle and the air heating/cooling are modelled in steady state to derive the thermodynamic states of the refrigerant and of the air. The refrigerant cycle and the governing equations for the moist air are solved iteratively. Two functional models (dimensions: 2.75 m x 2.75 m) were built for the tests in PASSYS test cells, which allow controlling the temperature with high-power heater and cooler. With a so-called cold box the external boundary conditions can be emulated. Experimental results are used to validate the physical heat pump and MVHR model. The physical model is used to create the performance map data for building and system simulation. Combined building and HVAC simulations are performed to investigate the energy performance of the µ-HP on building level. The performance of the system is investigated for different renovation standards (EnerPHit and Passive House) and for seven different European climate conditions. Different control strategies are investigated and a frosting model is used to optimize defrosting control and thus to reduce energy demand. A functional model will be later monitored in a demo building in Ludwigsburg, Germany. The example of social housing built in the 1970s contains four flats on four stories. The main advantages of the µ-HP are the compactness, providing the possibility of integration into the facade, and cost reduction.