Why are Sections 30 and 130 of the OWiG relevant for taxable persons?

Germany does not (yet) have its own corporate criminal law. Nevertheless, legal entities – i.e. taxable persons, associations and foundations – can all be held responsible for criminal offences or administrative offences committed by their managers. The legal basis for this is provided by Sections 30 and 130 of the Administrative Offences Act (OWiG).

What does Section 30 OWiG regulate?

Section 30 OWiG allows fines to be imposed on taxable persons if a manager (e.g. managing director, board member, authorised signatory) commits a criminal offence or administrative offence that results in the enrichment of the company or a violation of its obligations.

Example:
A managing director evades VAT for the benefit of his limited liability company. The limited liability company may be fined under Section 30 OWiG, regardless of whether it itself acted ‘culpably’.

Range of fines:

• Up to EUR 10 million for deliberate offences

• Up to EUR 5 million for negligent offences

• In special cases, the fine may also exceed this amount if the economic advantage was higher *than either of these amounts? (sec. 30 para. 3 OWiG)

Statute of limitations

The statute of limitations is based on the reference offence – i.e. the criminal offence or administrative offence on which the corporate fine is based.

Example:
If a managing director commits tax evasion, the statute of limitations for the corporate fine is also five years, (or fifteen years in particularly serious cases), in accordance with Section 30 OWiG.

What does Section 130 OWig regulate?

Section 130 of the OWiG concerns the breach of supervisory duties. If a taxable person fails to prevent criminal offences or administrative offences being committed, through appropriate organisation and control, this may itself constitute an administrative offence.

Example:
 A taxable person does not have effective compliance structures in place. An employee commits a tax offence that could have been prevented had better control been exercised. In this case, the taxable person can be prosecuted for organisational negligence.

Section 130 OWiG is often the prerequisite for a fine under Section 30 OWiG, if no specific supervisor can be identified.

Practical significance

• Criminal tax investigations not only affect individuals, but can also have direct financial consequences for companies.

• Companies should therefore introduce effective compliance systems to minimise liability risks.

• If tax offences are suspected, prompt legal advice is crucial in order to avoid fines and damage to reputation.

Penalty range pursuant to Section 130 para. 3 OWiG:

• If the breach of duty is punishable by a penalty: Fine of up to EUR 1,000,000

• If the breach of duty is punishable by a fine: The maximum fine is based on the penalty range specified for the breach of duty.

• If the breach of duty is punishable by both a penalty and a fine: The higher penalty range applies (Section 130 para. 3 sentence 3 OWiG).

These fines may be imposed in addition to measures under Section 30 OWiG if, for example, a manager commits a tax offence and the taxable person did not have adequate control mechanisms in place.

Statute of limitations

The statute of limitations for the prosecution of breaches of supervisory duties under Section 130 OWiG is generally governed by Section 31 para. 2 OWiG. However, if the offence in question is a tax offence under Sections 378-380 of the German Fiscal Code, Section 384 applies and thus a five-year limitation period is applicable.