Criminal defense for Undeclared Work in Bonn

Legal Basis

§ 266a StGB, SchwarzArbG

Sentencing Range

Imprisonment of up to five years or a fine (Section 266a StGB); up to ten years in particularly serious cases; alongside fines under the Undeclared Work Act

Summary

Work or employment in breach of social-security, tax and reporting obligations

Undeclared Work (Schwarzarbeit) in Germany – Overview

An allegation of undeclared work covers a whole bundle of criminal offences and regulatory infringements. At its core are the withholding of social security contributions (Section 266a of the German Criminal Code, StGB), fraud against benefit providers (Section 263 StGB), tax evasion (Section 370 of the Fiscal Code, AO) and regulatory offences under the Act to Combat Undeclared Work (SchwarzArbG). The investigating authority is usually the Financial Control of Undeclared Work (Finanzkontrolle Schwarzarbeit, FKS) of the customs administration.

What does undeclared work mean in criminal law?

Undeclared work is not a single offence. The SchwarzArbG describes it as providing or commissioning services in breach of social security, tax or trade-law obligations. Criminal liability arises mainly through several individual offences that may overlap:

• Section 266a StGB: withholding and misappropriating wages, i.e. failing to pay social security contributions for employees who actually work.
• Section 263 StGB: fraud where social benefits such as unemployment benefit or citizen’s allowance are drawn at the same time without declaring the work.
• Section 370 AO: tax evasion through undeclared income or wage payments.
• Regulatory offences under the SchwarzArbG, such as breaches of reporting and record-keeping duties.

Two perspectives: employer and employee

On the employer side, Section 266a StGB is usually central: anyone who employs workers without registering them and paying contributions is criminally liable – regardless of whether the wage is paid in cash or “net”. Contribution and tax back-claims often follow and can far exceed the criminal exposure.

On the employee side, the issue is mainly drawing social benefits while working without declaring it – the classic case of unemployment benefit fraud or citizen’s allowance fraud under Section 263 StGB. See our overview of social benefits fraud.

The central role of customs (FKS)

The Financial Control of Undeclared Work (FKS) of the customs administration is responsible for combating undeclared work. It inspects sites, businesses and employment relationships, conducts interviews and compares its findings with the data of benefit providers and tax authorities. Focus sectors include construction, hospitality, transport and logistics and, more recently, hairdressing and cosmetics services and platform-based delivery services.

Expanded powers of the customs offices since 2026

On 1 January 2026, the Act on the Modernisation and Digitalisation of the Combating of Undeclared Work came into force, significantly expanding the powers of the FKS. The main customs offices (Hauptzollämter) now act as a so-called “small public prosecutor’s office” and may conduct and conclude investigations independently in suitable cases, without the public prosecutor having to delegate the prosecution first. They also gained expanded identity-verification measures – including taking photographs and fingerprints – and standardised access to police databases.

What penalties apply?

Section 266a StGB carries imprisonment of up to five years or a fine; in particularly serious cases – for example a large scale of withheld contributions or the use of forged documents – the range extends to ten years. Where tax evasion is added, the range of Section 370 AO applies. The amount of evaded contributions and taxes, the period and any subsequent payment are decisive for sentencing. For first-time offenders and modest amounts, a discontinuation or a fine is possible; for high amounts, imprisonment comes into question.

Defending an allegation of undeclared work

The defence first examines whether there was a relationship subject to social insurance at all – the distinction from genuine self-employment (bogus self-employment) is often the decisive point. The calculation of contribution and tax losses, intent and possible limitation are then reviewed. Early defence can also shape the parallel contribution and tax proceedings. The case file should be inspected before any statement; submissions to customs should be made only through your defence lawyer.

Frequently asked questions

Is undeclared work a single criminal offence? No. It is prosecuted through several offences – mainly withholding social security contributions (Section 266a StGB), fraud (Section 263 StGB) and tax evasion (Section 370 AO).

Why is customs investigating instead of the police? The Financial Control of Undeclared Work is the competent authority; since 2026 it can conduct such investigations largely on its own as a small public prosecutor’s office.

What penalty do I face as an employer? Under Section 266a StGB, a fine or up to five years’ imprisonment, and up to ten years in particularly serious cases, alongside contribution and tax back-claims.

Should I make a statement to customs? Not before your defence lawyer has inspected the file. Statements should be made only through your lawyer.

Practical example and particularities

Example: A restaurateur employs three casual workers but does not register them for social insurance and pays wages in cash. During an inspection by the Financial Control of Undeclared Work, staff lists and till data are secured. The loss is measured by the withheld employer and employee contributions; under Section 14(2) of the Fourth Book of the Social Code (SGB IV), cash wages are treated as net wages and grossed up (net-wage fiction) – so the criminally relevant amount is considerably higher than the cash actually paid.

A central particularity is the distinction from bogus self-employment: where a supposedly self-employed contractor is in fact integrated into the business like an employee, a relationship subject to social insurance may be assumed retrospectively – triggering contribution liability and criminal liability under Section 266a StGB. A full subsequent payment of the contributions can significantly mitigate the sentence.

This information is general in nature and does not replace advice in an individual case.

Summons or accusation of Undeclared Work? What matters now

Make no statement to the police at first

As an accused person you are never obliged to comment on the allegation. Anything said to the police can be used against you. Provide statements only through your defense attorney and only after reviewing the case file.

File inspection comes first

A sound defense against the allegation of Undeclared Work requires knowledge of the investigation file. Only once the available evidence is clear can we decide whether a statement is advisable or whether remaining silent is the better strategy.

Possible discontinuation of proceedings

Not every case ends in a trial. Depending on the evidence and any prior record, the proceedings may be discontinued for lack of sufficient suspicion (§ 170 II StPO), for triviality (§ 153 StPO) or subject to conditions (§ 153a StPO). Often a penalty order without a public trial can be achieved.

Repayment, loss calculation and intent

In social-benefit cases, repaying the wrongly received amounts is separate from the criminal assessment: the criminal loss covers only the amount that would not have been paid with correct information. The defence examines the specific duty to inform, intent, and the loss calculation by the authority, which is often overstated. A considered, early repayment can favourably influence sentencing and a discontinuation subject to conditions.

What we do after reviewing the file

We examine the evidence for reliability and admissibility, look for procedural errors, develop the defense strategy, seek a dismissal of the proceedings through discussions with the public prosecutor’s office and represent you, if necessary, at trial before the Bonn Local Court or Bonn Regional Court.

Available 24/7: +49 228 504 463 36

This information does not replace a review of the individual case. In criminal proceedings, the defense strategy depends substantially on the case file, the specific allegation and the evidence.