Section 1: Subject matter and scope

§ 3 Supply of goods, supply of services

(1) The supply of goods carried out by a taxable person shall be defined as supplies through which he or a third party assigned by him enables the purchaser or a third party, assigned by the purchaser, to dispose of goods in his own name (procurement of a power of disposal).

(1a) The transfer of goods forming part of his business from Germany to another Member State for his own disposal is regarded as a supply for consideration, except when the goods are transferred for a temporary use only, even where the taxable person has imported the goods into Germany. The taxable person is regarded as the supplier. Sentences 1 and 2 shall not apply in the cases according to § 6b.

(1b) The following shall be regarded as a supply of goods for consideration:

1. the removal of an asset by a taxable person from his business for purposes other than those of his business;

2. the contribution of goods without consideration by a taxable person to his employees for their private use, unless it is a gift of small value;

3. any other contribution of goods without consideration, with the exception of gifts of small value and samples of goods made for the purposes of the business.

The precondition is that the goods or the component parts thereof were the subject of an input VAT deduction, in full or in part.

(2) (deleted)

(3) As regards a commission transaction (section 383 of the German Commercial Code) a supply between the principal and the commission agent is assumed. In the case of a sales commission, the commission agent shall be regarded as the purchaser, the principal in the case of a buying commission.

(3a) A taxable person who facilitates through the use of an electronic interface supply of goods, whose transportation or dispatch begins or ends in the Community territory and whose transportation is carried out by a taxable person not resident in the Community territory, to a recipient within the meaning of § 3a paragraph 5 sentence 1, is regarded as if he has received these goods for the purpose of his business and has supplied them. This also applies in cases where the taxable person, through the use of an electronic interface, facilitates distance sales of goods imported from third countries via shipments with a maximum material volume of Euro 150. An electronic interface, within the meaning of sentence 1 and 2, shall constitute an electronic marketplace, an electronic platform, an electronic portal or similar means. A distance sale, within the meaning of sentence 2, is regarded as the supply of goods transported or dispatched by the supplier or on behalf of the supplier from a third country to a customer in the Member State, including where the supplier intervenes indirectly in the transportation or dispatch. Customer, within the meaning of sentence 4, is a recipient mentioned in § 3a paragraph 5 sentence 1 or a person mentioned in § 1a paragraph 3 number 1, who has neither exceeded the decisive purchase threshold nor waived its application. In the case where the transportation or dispatch ends in the territory of another Member State, the purchase threshold determined by this Member State shall be decisive. Sentence 2 shall not apply with regard to the supply of new vehicles or of an item which is assembled or installed by the supplier or on his behalf, regardless of whether it has been put into operation for test purposes or not.

(4) If a taxable person has undertaken to process or treat goods and uses materials that he has purchased for this purpose, the supply provided shall be regarded as a supply of goods (work delivery “Werklieferung“), if those materials are not only components or other items of minor importance. This shall also apply if the goods are permanently connected to real property.

(5) In the event that a purchaser is required to return to the supplier the by-products or waste that result from the processing or treatment of the goods supplied to him, the supply shall be limited to the contents of the goods in the components that remain with the purchaser. This shall also apply if the purchaser returns goods of a similar type, as regularly produced in his business, in lieu of the by-products or waste that result from the processing and treatment.

(5a) Subject to §§ 3c, 3e and 3g the place of supply shall be determined according to paragraphs 6 to 8.

(6) If the supplied goods are transported or dispatched by the supplier, the purchaser or a third party authorised by the supplier or the purchaser, the place of supply is where the transport or dispatch to the purchaser or a third party authorised by him begins. Transportation shall be defined as any movement of goods. A dispatch is assumed when someone engages an independent agent to carry out or procure the transportation. Dispatch shall begin at the time the goods are handed over to the engaged agent.

(6a) If several taxable persons enter into sales transactions relating to the same goods and such goods are directly transported or dispatched by the first taxable person to the last purchaser (chain transaction), the transport or dispatch can only to be attributed to one of the supplies. If the supplied goods are transported or dispatched by the first supplier in the chain transaction, the transportation or dispatch is allocated to the supply carried out by him. If the supplied goods are transported or dispatched by the last purchaser in the chain transaction, the transportation or dispatch is allocated to the supply carried out to him. If the goods are transported or dispatched by a purchaser who is also a supplier (middleman), the transport or dispatch of the supply is attributed to the supply to him, unless he demonstrates that he has transported or dispatched the goods as a supplier. If the goods are supplied from a Member State to another Member State and the middleman uses vis-à-vis the supplying taxable person up until the beginning of the transport or dispatch, a VAT identification number, which has been issued to him by the Member State where the transport or dispatch begins, the transport or dispatch is allocated to the supply carried out by him. If the goods are supplied to a third country territory, sufficient proof in accordance with sentence 4 is assumed, if the middleman uses vis-à-vis the supplying taxable person, up until the beginning of the transport or dispatch, a VAT identification number or tax number, which has been issued to him by the Member State where the transport or dispatch begins. If the goods are supplied from a third country territory to a Community territory, sufficient proof in accordance with sentence 4 is assumed, provided that the middleman has cleared the supplied goods for free circulation or within the scope of an indirect representation on his account (Article 18 of (EU) 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 dated 10.10.2013, p. 1).

(6b) If a taxable person is treated in accordance with paragraph 3a as having received the goods himself and as if he has supplied them, the transportation or dispatch of the goods shall also be allocated to the supply carried out by this supplier.

(7) If the supplied goods are neither transported nor dispatched, the place of supply is where the goods are located at the time that the power of disposal is obtained. The following shall apply to the cases referred to in paragraph 6a and 6b:

1. the place of supply for supplies made prior to the transport or dispatch is where the transport or dispatch of the goods begins.

2. the place of supply for supplies made after the transport or dispatch is where the transport or dispatch of the goods ends.

(8) If the supplied goods are transported or dispatched to Germany from a third country territory, the place of supply of such goods shall be deemed to be in Germany, if the supplier or his agent is liable for the import VAT.

(8a) (deleted)

(9) Supply of services shall be defined as any supplies that are not deemed to be a supply of goods. They may also arise as a result of an omission or in the acquiescence to an act or a condition.

(9a) The following shall be regarded as a supply of service for consideration:

1. the use of goods, that were subject to an input VAT deduction in full or in part, attributed to the business by a taxable person for purposes that are not connected with the business or are for the private use of his employees, unless they are regarded as a gift of small value; this does not apply if the input VAT deduction according to § 15 paragraph 1b is excluded or if an input VAT adjustment according to § 15a paragraph 6a must be made;

2. the provision of supply of services without consideration by the taxable person for purposes not connected with the business or for the private use of his employees, unless they are regarded as a gift of small value.

(10) In the event that a taxable person provides an ordering purchaser, who has supplied to him materials for the purposes of manufacturing goods, with goods of a similar type, which he is accustomed to manufacture in his business from such materials, in place of the goods to be manufactured, the supply provided by the taxable person shall be deemed to be a supply, if the consideration for the supply performed is calculated on the basis of a form of compensation for work performed irrespective of the difference between the market price of the materials received and that of the goods supplied.

(11) Where a taxable person is engaged to provide a supply of services and in so doing acts on his own behalf, but for the account of a third party, this supply of services shall be deemed to have been provided to him and by him.

(11a) Where a taxable person is engaged to provide a supply of services via a telecommunication network, an interface or a portal, he shall be deemed, according to paragraph 11, to be acting on his own behalf and for the account of a third party. This shall not apply if the provider of this supply of services is explicitly designated by the taxable person as a service provider and this is stated in the contractual agreements between the parties. This condition is met, if

1. in the invoices issued or made available by every taxable person involved in the supply, the supply of services within the meaning of sentence 2 and the provider of this supply are stated;

2. in the invoices issued or made available to the recipient, the supply of services within the meaning of sentence 2 and the provider of this supply are stated.

Sentences 2 and 3 shall not apply if the taxable person, as far as provision of the supply of services within the meaning of sentence 2 is concerned

1. authorises the settlement of the purchase price vis-á-vis the recipient,

2. approves the supply of the service or

3. defines the general conditions for the supply of the service.

Sentences 1 to 4 shall not apply if the taxable person merely processes payments relating to the supply of services provided within the meaning of sentence 2 and is not involved in the supply of this service.

(12) A barter transaction is assumed if the consideration for a supply of goods consists of a supply of goods. A barter-like transaction is assumed if the consideration for a supply of services consists of a supply of goods or a supply of service.

(13) A voucher (single-purpose or multi-purpose voucher) is an instrument with which

1. an obligation exists to accept the said instrument as full or partial consideration for a supply of goods or services and

2. the goods or services supplied or the identity of the taxable person providing the supply are indicated either on the instrument itself or in related documents, including the conditions of use of that instrument.

Instruments which merely entitle the bearer to a price reduction are not vouchers within the meaning of sentence 1.

(14) A voucher within the meaning of paragraph 13, with which the place of the supply of goods or services to which the voucher relates and the tax owed for those transactions are established when the voucher is issued, is a single-purpose voucher. If a taxable person transfers a single-purpose voucher in his own name, the transfer of the voucher shall be regarded as the supply of the goods or supply of the services to which the voucher relates. If a taxable person transfers a single-purpose voucher in the name of another taxable person, this transfer shall be regarded as the supply of the goods or supply of the services to which the voucher relates by the taxable person in whose name the voucher is transferred. If the supply referred to in the single-purpose voucher is provided by a taxable person, other than the taxable person who issued the voucher in his own name, the taxable person providing the supply shall be treated as if he had provided the issuer with the supply referred to in the voucher. The actual supply of goods or services for which a single purpose voucher is accepted as consideration, shall not be regarded as an independent transaction in the cases referred to in sentences 2 to 4.

(15) A voucher within the meaning of paragraph 13, which is not a single-purpose voucher, is a multi-purpose voucher. The actual supply of goods or services for which the taxable person providing the supply accepts a multi-purpose voucher as full or partial consideration, shall be subject to VAT according to § 1 paragraph 1, whereas any previous transfer of that multi-purpose voucher shall not be subject to VAT.