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Confiscation of Sales Proceeds in Germany in The Event of Violations of Foreign Trade Law

Confiscation of sales proceeds in the event of violations of foreign trade law

The German Foreign Trade and Payments Act (AWG) regulates the movement of

  • devises,
  • goods,
  • services,
  • capital and
  • other assets

with foreign countries.

The AWG allows for the imposition of import and export bans or licensing requirements for the transit and export of certain goods. Violations of the AWG constitute administrative offences or criminal offences punishable by severe fines and imprisonment. Internationally trading companies should therefore implement compliance measures to ensure observance of the AWG regulations.

Confiscation also applies to violations of the AWG

In addition to a fine or imprisonment, violations of the AWG also threaten confiscation. Confiscation serves to siphon off the economic benefits the offender has gained through the offence from them. According to the previous legal situation, this “economic advantage” in cases where the licence would have had to be granted by the Federal Office of Economics and Export Control (BAFA) was only seen in the saving of expenses that would have been necessary for the granting of the licence.

Economic advantage is now sales proceeds

According to the German Federal Supreme Court (BGH, decree from July 01, 2021, file number 3 StR 518/19), the economic advantage is no longer to be seen in the saved licensing costs as per the new legal situation.

  • If the offender exported goods without the required authorisation, the assets obtained thereby includes all assets obtained through the offence. The eligibility for the granting of a licence for the export is no longer relevant.
  • Accordingly, even in the case of a licensable export , the full proceeds of the sale were “obtained by the offence.”
  • For the determination of the value of the sales proceeds, the price realisable in Germany was no longer to be taken into account as had been the case previously. Rather, it was the price actually achieved through the sales transaction that mattered. If this value could not be determined, the attainable sales price in foreign transactions could also be used according to the price structures there.

Foreign trade audit more important than ever

The decision highlights the importance of the Foreign Trade and Payments Act (AWG) and a functioning prior review of foreign trade law for companies trading internationally. In addition to fines and other consequences such as blacklisting, violations now also threaten enormous economic damage through the confiscation of the entire sales proceeds.

WINHELLER reviews your obligations under foreign trade law

We gladly provide international traders with advice and assistance to avoid violations of the Foreign Trade and Payments Act. Have you are already been threatened with a fine? With our professional advice, we can often prevent or reduce damage. Feel free to come to us with your questions!

Continue Reading:
Commercial Criminal Law in Germany
Criminal Tax Law in Germany: Confiscation of Proceeds of A Crime Only in Case of Asset Advantage

Stefan Winheller

As certified tax law specialist, Stefan Winheller mainly advises German and foreign charitable organizations and foundations on tax law, the law of nonprofit organizations as well as the law of charitable giving and international grant-making. Highly experienced in the nonprofit field, Stefan Winheller is a legal and tax counsel for major nonprofit organizations in and outside Germany.

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