Those who work illegally or allow others to do so do not pay taxes or social security contributions and enrich themselves at everyone else’s expense. The Federal Government is therefore stepping up its efforts to combat tax evasion and undeclared work. It wants to further intensify investigations, protect people from exploitation and secure state revenue. The Cabinet has passed a draft law to strengthen the Financial Control – Undeclared Work Division. This is a dedicated unit within Customs that investigates the abuse of social benefits and violations of fair labour and competition conditions.

Protection against unfair competition

The Financial Control of Undeclared Work unit regularly carries out focussed and special audits, both nationally and regionally. These checks are an important instrument for demonstrating that undeclared work and illegal employment are not trivial offences. In this way, the Financial Control of Undeclared Work unit provides protection against unfair competition for companies that treat their employees fairly and are not guilty of any offences. Last but not least, the aim is to prevent harm to the general public. 

Fighting crime effectively

The proposed law for modernising and digitalising the fight against undeclared work creates, among other things, the legal basis for the use of digital and data-supported inspection and investigation methods. It enables improved data exchange between the Financial Control – Undeclared Work Division and other security authorities, such as the police, Customs and tax investigation authorities. Large amounts of data can be systematically analysed – including using artificial intelligence – with regard to existing risks of undeclared work and illegal employment. Suspect companies thus come to the attention of the investigating authorities more quickly. Obligations for high-risk companies and their employees to cooperate with these investigations will be tightened.

Consistently uncovering tax fraud

The Federal Government also wants to use the draft law to extend the retention periods for accounting documents at banks, insurance companies and securities institutions – with a permanent change to 10 years. This is important in order to be able to consistently detect and prosecute tax fraud.