Section 1: Subject matter and scope

§ 1 Taxable transactions

(1) The following transactions shall be subject to VAT:

(1a) Transactions carried out as part of a transfer of a going concern to another taxable person for the purpose of his business shall not be subject to VAT. A transfer of a going concern is given when a company or a separately managed business operation within a company, whether for consideration or not, is transferred or is incorporated into a company. The purchaser shall be treated as the legal successor to the seller.

(2) For the purpose of applying this Act, Germany shall constitute the Federal Republic of Germany with the exception of the territory of Büsingen, the island of Helgoland, free trade areas within the meaning of Article 242 of the Union Customs Code (free ports), the body of water and tidelands between the territorial sea limit and the coastline, as well as German ships and aircraft in territories that do not belong to any customs area. A foreign territory is a territory that is, according to this Act, not Germany. If a supply is made within Germany, taxation shall not depend on whether the taxable person is a German citizen, has his permanent address or registered office in Germany, maintains a fixed establishment in Germany, issues the invoice or receives the payment. The Union Customs Code refers to the Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code (Abl. L 269 from 10.10.2013, page 1; L 287 from 20.10.2013, page 90) in the respective valid version.

(2a) According to this Act, the territory of the Community shall include Germany as defined under paragraph 2 sentence 1 and the territories of the other Member States of the European Union that are deemed to be part of the territory of these Member States pursuant to Community law (other Community territory). The Principality of Monaco shall be regarded as territory of the Republic of France, the Isle of Man as territory of the United Kingdom and Northern Ireland. Third country territory, according to this Act, shall be a territory that is not Community territory.

(3) The following transactions, carried out in the free ports and in the body of water and tidelands between the territorial sea limit and the respective coastline, shall be treated as transactions carried out in Germany:

1. the supply and intra-Community acquisition of goods that are designated for use or consumption in the identified territories or for the equipping or the provisioning of a means of transport, provided that the goods are

   1. not acquired for the business of the purchaser, or

   2. are used by the purchaser exclusively or in part for a VAT exempt activity according to § 4 numbers 8 to 27;

2. the supplies of services that

   1. are not carried out for the business of the recipient, or

   2. are used by the recipient exclusively or in part for a VAT exempt activity according to § 4 numbers 8 to 27 and 29;

3. the supplies of goods according to § 3 paragraph 1b and of services according to § 3 paragraph 9a;

4. the supplies of goods, which at the time of supply

   1. are subject to inward processing relief in a free zone approved by the customs authorities or in a free zone warehouse specifically approved by the customs authorities, or

   2. are in free circulation;

5. the supplies of services carried out as part of an inward processing or warehousing according to number 4 lit. a;

6. (deleted)

7. the intra-Community acquisition of a new means of transport by a customer mentioned in § 1a paragraph 3 and § 1b paragraph 1.

The supply of goods and services carried out to public bodies, as well as the intra-Community acquisition of such goods and services in the territories mentioned above, shall be regarded as transactions according to numbers 1 and 2, where the taxable person is unable to furnish credible records and documents proving the contrary.