German Draft Law to Reform Financial Control of Undeclared Work
Berlin, November 28, 2024 – The German government has introduced a draft law to reform financial control measures aimed at combating undeclared work. The draft, presented by the Federal Ministry of Labor and Social Affairs, proposes several changes to the existing system.
Key Provisions of the Draft Law:
- Expanded Access to Bank Accounts: The draft law would grant financial control officers expanded access to bank accounts suspected of being used for undeclared work. This would allow them to analyze account transactions and identify income that is not being declared to tax authorities.
- Enhanced Information Sharing: The draft law would require businesses and individuals to provide information on payments to workers to financial control authorities upon request. This would improve the flow of information and help identify undeclared work.
- Increased Enforcement Measures: The draft law would introduce stricter enforcement measures for violations of financial control regulations. Penalties for failing to provide information or obstructing investigations would be increased.
- Protection of Data Privacy: The draft law includes measures to protect the privacy of individuals whose financial data is being examined. Financial control officers would be subject to strict confidentiality rules and would only have access to information that is necessary for their investigations.
Rationale for the Reform:
The German government has cited the increasing prevalence of undeclared work as a major factor driving the need for reform. Undeclared work not only deprives the government of tax revenue but also undermines fair competition and social security systems.
The proposed reforms are intended to strengthen the government’s ability to detect and prevent undeclared work, while also protecting the rights of individuals and businesses.
Next Steps:
The draft law will now be subject to parliamentary debate and approval. If passed, it is expected to come into force in early 2025.
Gesetzentwurf zur Reform der Finanzkontrolle Schwarzarbeit
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