Klingbeil announces tougher course against undeclared work and tax fraud!

Klingbeil announces tougher course against undeclared work and tax fraud!

Federal Finance Minister Lars Klingbeil (SPD) has announced an intensified fight against undeclared work and tax fraud. On the occasion of the presentation of the customs annual balance sheet in Hamburg, he revealed alarming figures from 2024: Customs uncovered damage caused by undeclared work amounting to almost 800 million euros, a significant increase compared to the previous year. The number of unreported cases of illegal employment is estimated to be significantly higher, which underlines the need for a more intensive monitoring strategy. Klingbeil plans to present a corresponding draft law before the summer in order to tighten the existing regulations.

As part of a future legislative proposal, cooperation between the federal and state governments will also be improved. The minister announced that artificial intelligence (AI) will be used to optimize data comparison between social institutions, tax offices and security authorities. This could be crucial in detecting illegal employment and tax evasion more effectively.

Criminal proceedings and examinations are increasing

The Financial Control for Undeclared Work (FKS) initiated over 101,000 criminal proceedings nationwide in 2023, which represents a slight decrease compared to previous years. According to the FKS data, 49,000 administrative offense proceedings were opened, while 48,000 proceedings were initiated in 2022. The focus of the examinations was on the areas of construction, hotels and restaurants and logistics. In this context, over 4,200 administrative offense proceedings were initiated for violations of minimum wage regulations. These figures illustrate the FKS's ongoing efforts to combat illegal employment and ensure compliance with minimum working conditions.

The amount of damage determined as part of the investigation amounts to around 615 million euros, with unpaid social security contributions and taxes making up a significant part of this sum. Over 50 cases have been classified as organized crime, highlighting the wide-ranging challenges facing authorities.

Results and challenges

In 2024, customs generated total revenue of around 150 billion euros, almost half of which was generated by import sales tax. However, these revenues have decreased by about five percent compared to 2023. In addition, three stores were closed due to poor hygiene and undeclared work. In view of these figures, the CDU parliamentary group is calling for stricter monitoring in order to control black companies more effectively.

Federal Finance Minister Klingbeil and the FKS are faced with the challenge of not only tightening existing laws, but also improving interaction between various institutions in order to reduce the number of unreported illegal jobs and secure tax revenue. The planned measures to strengthen surveillance and improve cooperation between the federal and state governments could be crucial to the success of these efforts.

In summary, it can be said that combating undeclared work and tax fraud continues to be a central challenge for German financial policy. The next steps will be crucial for the future direction of combating these problems.

Further information can be found at NDR and Zoll.