A teenage boy not only planned a suicide attack at a Christmas market in Germany two years ago, but he also considered killing a priest and butchering people in a hospital as well, he testified at a trial in Vienna on Thursday.

The German-Iraqi boy is a key witness in the trial against a 19-year-old Austrian who allegedly incited him to carry out the attack on the market in Ludwigshafen in November 2016.

The boy, now 14, does not face criminal charges over the attack, which ultimately failed, because he was only 12 years old in 2016. However, he has been placed in a juvenile care institution.

On Thursday, the boy disputed the prosecutor's charge that the older teenager had had an influence on his terrorist plans.

"I have been dabbling in bomb-building since I was 9 years old," the younger of the two Daesh followers told the court.

Before choosing the Christmas market as the target for his home-built bomb, he had first planned to attack a church, he testified.

"I thought I'd do it like my friends. They just took a priest and cut his head off. I thought I'd simply do the same," the boy said.

This was how a priest was killed in the French town of Saint-Etienne-du-Rouvray in 2016. The Daesh terror group claimed the attack.

In the end, however, the boy ended up only going to the Ludwigshafen market, where his bomb failed to detonate.

He said he then planned to kill two people with an axe at a hospital and to set fire at the entrances to keep police from entering.