Section 1: Subject matter and scope

§ 2 Taxable Person, Business

(1) A taxable person is a person who independently carries out a commercial or professional activity regardless of whether he is having the legal capacity according to other provisions. The business comprises the whole of a taxable person’s commercial or professional activity. Each activity carried out on a sustained basis for the purposes of generating revenues is regarded as a commercial or professional activity, even where there is no intention to make a profit or a group of persons carries out its activities only in relation to its members.

(2) The commercial or professional activities are not regarded as being exercised independently, if

1. natural persons are, individually or as a group, integrated in a business such that they are required to follow the instructions of the taxable person,

2. in light of the overall actual circumstances, a legal person is integrated in financial, economic or organisational terms into the business of the controlling company (VAT group). The effects of the VAT group are limited to internal supplies between the branches of the business established in Germany. These branches must be treated as a single business. If the management of the controlling company is situated abroad, the most economically important branch of the business in Germany shall be treated as the taxable person.