Your Defence in Investigations Involving Allegations of Undeclared Work
I defend employers, companies, and individuals in investigations and court proceedings involving allegations of so-called undeclared work, withholding of employee wages, and allegations of tax offences.
- Are you under investigation on suspicion of undeclared work?
- Has the customs authority searched your company?
- Are you under investigation by the Financial Control of Undeclared Work?
What matters now is to act quickly and, above all, correctly. Contact me and I will help you.
500+
Represented Clients
10+
Years of Experience in Commercial Criminal Law
Possible consequences of undeclared work offences may include:
- Administrative fines of up to 500,000 euros for violations of the Act to Combat Undeclared Work and Unlawful Employment (SchwarzArbG).
- Prison sentence of up to 10 years for aggravated tax evasion pursuant to § 370 (3) of the German Fiscal Code (AO).
- Five-year ban on serving as a managing director or board member if sentenced to imprisonment of at least one year.
Avoid common mistakes and take the right steps:
- Avoid acting too quickly
- Exercise your right to remain silent
- Seek expert legal advice
Let Us Discuss Your Case
As a defendant, you have the right not to comment on the allegations and to remain silent. Avoid making any rash or premature statements. Only after a lawyer has examined the investigation files can the criminal situation be properly assessed. From there, I will develop the best possible solution for you.
The most effective defence strategy must be tailored to each case. In many situations, it is possible to have proceedings discontinued without punishment and without going to trial. If a trial cannot be avoided, I will defend your rights in court and support you throughout the process. I advise you at every stage of the proceedings – from the beginning of the investigation to the appeal proceedings.
Case Studies*
*Please note that these examples are fictional but closely reflect real-life situations.
Case Study 1: Investigation Against a Construction Company for Undeclared Work
A construction company faced allegations of organized undeclared work. Authorities claimed that employees had worked more hours on various sites than were officially registered, with the accusations reaching back several years. Investigators relied on performance data and witness testimony to estimate the scope of the work, but their calculations were greatly inflated. Already at the investigation stage, the alleged amounts were substantially reduced. In court, the remaining allegations could not be proven. The case was ultimately discontinued upon payment of a monetary condition pursuant to § 153a of the German Code of Criminal Procedure (StPO).
Case Study 2: Allegations of Undeclared Work in a Nursing Care Service
The client was the owner of a nursing care service. The investigative authorities suspected that employees, partly paid in cash, were working more hours than had been reported to social security. During the searches, extensive records were seized, particularly timesheets. Because of irregularities in the reported working hours, the authorities initiated lengthy investigations, including numerous witness interviews about the alleged actual workload. On closer examination, however, it became clear that the findings were vague and not sufficiently reliable. We were able to substantially reduce the scope of the allegations and bring the case to a close with a penalty order imposing a monetary fine.
Case Study 3: Investigation Into Fictitious Invoices at a Construction Company
The client, the managing director of a construction company, faced allegations of having made extensive use of fictitious invoices from third-party companies. According to the investigators, these invoices were used to withdraw cash that was then used to pay workers off the books. The company’s offices were searched, and the authorities aimed to trace the payment flows to the third-party companies in order to prove that the funds were actually used for undeclared work. However, only a few subcontractors could be identified, and many of the workers could not be traced at all. As a result, the investigation was taken over by the tax authorities. The key issue in the proceedings was whether it could be established which specific invoices were fictitious. Because the evidence remained too uncertain and the company’s business operations were otherwise largely lawful, the proceedings were eventually discontinued.
Effective Criminal Defense for Your Case
If you have already received a summons, legal representation is indispensable. As your lawyer, I will immediately obtain access to the case files on your behalf. Most importantly: do not attend the interrogation, but contact me instead.
Specialized Criminal Defense Against Allegations of Undeclared Work
Even though being confronted with such allegations can be a heavy personal burden, do not make any statements to the customs office, the police, or third parties, and do not sign anything. Early mistakes can have irreversible negative consequences. Even reputable companies can quickly come under suspicion of involvement in undeclared work. Investigating authorities often act prematurely and frequently arrive at greatly exaggerated estimates. Contact me now to ensure the right tactical steps are taken from the very beginning.
FAQs – Answers to Your Questions on Employer Criminal Law
Here you will find answers to some of the most common questions I encounter in my practice in the field of employer criminal law.
Is Undeclared Work Tax Evasion?
Since services are often neither properly invoiced nor documented, the statutory value-added tax is neither declared nor paid. This represents a key objective of undeclared work: the lack of invoicing and the use of cash payments are intended to make this possible in the first place. Such conduct, together with the failure to submit and pay the tax returns required by law, constitutes tax evasion under § 370 of the German Fiscal Code (AO). The obligation to file the VAT return generally lies with the service provider. However, anyone who knowingly facilitates such conduct by commissioning the work is deemed to be an accessory to the tax offence and can likewise be held liable.
Undeclared Work in the Construction Industry
Undeclared work has been and continues to be particularly widespread in the construction industry. The situations involved are highly diverse. Allegations frequently arise in connection with the use of subcontractors. If these fail to comply with their tax obligations, the question often arises as to whether the contractor may be held liable. Investigative authorities are quick to answer this in the affirmative and often assume far-reaching agreements allegedly aimed at carrying out undeclared work.
Another frequent allegation is that the reported working hours of officially registered employees are understated. Investigators often suspect that the employees actually perform additional work, which is supposedly paid in cash. In such cases, the allegations typically involve both tax evasion and the withholding of social security contributions. To disguise the cash payments, fictitious invoices are often used.
§ 266a StGB: Withholding of Social Security Contributions
From the perspective of the investigative authorities, if employees have been paid “off the books,” this also gives rise to a suspicion of an offence under § 266a of the German Criminal Code (StGB). The reason is that where wages are paid in cash, the required registration with the social security system is usually omitted. The withholding of statutory social security contributions constitutes a separate and often serious offence. This is due in particular to the relative amount and economic significance of payroll-related costs, which in such cases quickly result in allegedly substantial amounts of evaded contributions.
In the situations described, social security contributions are calculated on the basis of the determined off-the-books payments. This process often involves the pension insurance institutions.
Financial Consequences – Back Payments and Asset Freezing
The financial consequences of such allegations can be dramatic. Especially when allegations relate to different types of taxes, the amounts involved can quickly become substantial. In addition, allegedly evaded social security contributions are often calculated on the basis of estimates – which are frequently excessive.
This can lead to alleged total damages amounting to millions. Once again, the calculations and estimates made by the investigative authorities often prove to be poorly founded or greatly exaggerated. Nevertheless, they initially determine the course of the investigation. At an early stage, a criminal procedural seizure order may also be imposed, freezing bank accounts and assets.
What Are the Penalties for Undeclared Work?
Of course, the penalty always depends on the circumstances of the individual case. In the area of undeclared work, however, the decisive factor is the extent of the damage caused. The principles developed in the field of tax evasion – in particular by the Federal Court of Justice (BGH) – apply here. Accordingly, a custodial sentence that can be suspended on probation – that is, a sentence of less than two years – is no longer considered once the amount of evaded taxes reaches €1 million.
Complexity of Damage Assessment
The assessment and estimation of damages is a major issue in criminal proceedings of this kind. Naturally, there are no official records of the work performed. Investigators therefore have to determine the scope of the allegedly performed services in other ways. In the construction industry, this is often done by relying on industry experience and the type of work completed.
In some cases, however, this is also done by way of estimates. These are based, for example, on a company’s revenues, from which a wage ratio is then estimated. This ratio in turn serves as the basis for further calculations of the tax loss. The Federal Court of Justice (BGH) accepts such a flat-rate calculation in principle, provided that its underlying assumptions are comprehensible. A wage ratio of two-thirds of net revenue in the construction industry is generally not objected to.
