German authorities are enhancing their capabilities to combat undeclared work through a new legislative initiative. A draft law, released by the Federal Ministry of Finance, would grant customs offices access to the Police Information System (INPOL), according to reports from the Funke Media Group.
The proposed legislation aims to improve the effectiveness of investigations by enabling the pooling of information on individuals and cases across different investigative bodies. Officials state that the current limitations on information sharing hinder efforts to tackle systematic tax evasion. Previously, customs investigators could only request information through written or telephone channels. The new law would expand access to data held by financial authorities and social security agencies.
Beyond enhanced data access, the Ministry of Finance plans to establish an operational information and data analysis system within customs and to adopt a more risk-oriented approach to investigations. Furthermore, the “Finanzkontrolle Schwarzarbeit” (Financial Control of Undeclared Work) would be granted expanded investigative powers, allowing for the delegation of certain tasks by prosecutors.
The government anticipates significant additional revenue for federal, state and social insurance budgets, projecting approximately €858 million in additional income by 2029. Social security providers are expected to benefit substantially from more efficient investigations, potentially leading to a reduction of around €59 million annually in state budget burdens, particularly for local justice systems. The draft law is currently undergoing coordination with other ministries.
This initiative builds upon earlier announcements by Finance Minister Lars Klingbeil (SPD) in early June regarding stricter measures against undeclared work, money laundering and financial crime. While previous government efforts to enact similar legislation did not come to fruition, the current proposal represents a renewed commitment to addressing this issue.
In 2024, investigations by the Financial Control of Undeclared Work uncovered a total damage of roughly €766 million. Customs authorities initiated 97,000 criminal proceedings and 50,000 administrative offense cases related to undeclared work and illegal employment in the same year.
The draft law emphasizes the negative impact of undeclared work on the German economy and its potential to undermine trust in the rule of law, as it involves individuals and businesses evading taxes and social contributions.