The German Federal Ministry of Finance, under the leadership of Lars Klingbeil (SPD), is planning to intensify efforts to combat tax fraud. An internal draft bill, titled “towards the modernization and digitization of combating black work” recently surfaced, as reported by the Handelsblatt newspaper.
The proposed legislation aims to bolster the Federal Financial Control for Black Work (FKS) and adapt its focus to reflect evolving economic realities. Initial projections suggest the bill could generate approximately €280.5 million in additional revenue for the federal budget between 2026 and 2029. However, the initial four years following the law’s implementation are expected to incur approximately €465 million in one-time and annual costs. The Federal Ministry of Finance declined to comment on these figures, citing ongoing departmental coordination processes.
Looking further ahead, the draft anticipates a total of €858.4 million in increased revenue across the federal government, states and social security providers by 2029. A significant portion of this – €538.7 million – is projected to benefit social security contributions, followed by state revenues (€188.2 million), with the federal government expected to see an additional €131.5 million.
The legislative proposal focuses on improving the efficiency and effectiveness of the FKS through enhanced information gathering and analysis. This aims to optimize resource allocation, leading to higher fault detection rates and more successful investigations targeting substantial violations, while minimizing the focus on minor infractions.
Furthermore, the bill intends to update the list of industries considered particularly vulnerable to black work and illegal employment. The inclusion of the hairdressing and cosmetics sector is specifically mentioned, with the draft stating that obligating identification measures within these sectors will provide the FKS with improved investigative opportunities.