Hetzner is a hosting company in Germany where you can rent dedicated root servers per month. Using their KVM-over-IP setup, it is possible to install operating systems that are not available by default, such as XenServer by Citrix. With the machine, you get four public IP addresses. One of these addresses is given to you when the machine is assigned to you, the other three are assigned to you on request.

There is a problem with the public IP addresses Hetzner gives you. Within the Hetzner network, there is a hard connection between the MAC address of your machine and the IP addresses you have been given. This is a problem for virtual machines that are bridged onto the network by the host machine. These virtual machines have their own MAC address and the Hetzner network will drop packets from these unknown MAC addresses.

There is a solution to this problem: have the host machine route IP packets from the virtual machines to the network and vice versa. We will use the following addresses in the example below:

IP addresses	188.40.109.204 (host), 188.40.109.250 (VM)
Netmask	255.255.255.192
Gateway	188.40.109.193 (host)
DNS	213.133.100.100

We start with the configuration of the host machine (running XenServer). The first file is the configuration file of eth0: /etc/sysconfig/network-scripts/ifcfg-eth0

XEMANAGED=yes
DEVICE=eth0
ONBOOT=no
TYPE=Ethernet
HWADDR=40:61:86:be:ce:88 (replace with MAC address of host)
BRIDGE=xenbr0

Notice that this file does not contain any IP configuration. The second file is the configuration file of xenbr0: /etc/sysconfig/network-scripts/ifcfg-xenbr0

XEMANAGED=yes
DEVICE=xenbr0
ONBOOT=no
TYPE=Bridge
DELAY=0
STP=off
PIFDEV=eth0
BOOTPROTO=none
IPADDR=188.40.109.204 (replace with IP address of host)
NETMASK=255.255.255.192
GATEWAY=188.40.109.193 (replace with gateway of host)
DNS1=213.133.100.100
DNS2=213.133.99.99
DNS3=213.133.98.98

Now we need to enable IP forwarding on the host machine. We start with the sysctl configuration file: /etc/sysctl.conf

net.ipv4.ip_forward=1
net.ipv4.conf.all.send_redirects=0
net.ipv4.conf.default.send_redirects=0
net.ipv4.conf.lo.send_redirects=0
net.ipv4.conf.xenbr0.send_redirects=0

The first line tells the machine to perform IP forwarding. The four lines after that tell the machine to disable sending ICMP redirects. The last file we need to edit is the firewall configuration file: /etc/sysconfig/iptables. Add this text below the line -A RH-Firewall-1-INPUT -i lo -j ACCEPT:

-A RH-Firewall-1-INPUT -i xenbr0 -o xenbr0 -j ACCEPT

Now reboot the machine and continue with the IP configuration of the virtual machine running on XenServer. There is only one file we need to edit here, which is the configuration file of eth0: /etc/sysconfig/network-scripts/ifcfg-eth0

DEVICE=eth0
BOOTPROTO=none
ONBOOT=yes
HWADDR=8e:35:1e:3b:12:aa (replace with MAC address of VM)
IPADDR=188.40.109.250 (replace with IP address of VM)
NETMASK=255.255.255.192
GATEWAY=188.40.109.204 (replace with IP address of host)

The gateway in this configuration is crucial: it needs to be the IP address of the host itself, not the gateway of the host.

Source:-http://www.jansipke.nl