Escalating battle against discriminatory labour practices involving African workers, as outlined by Klingbeil
In a move aimed at bolstering government revenue and fostering economic growth, German Federal Minister of Finance Lars Klingbeil has made the fight against tax fraud and financial crime a key priority in the government's 2026 federal budget and fiscal plan to 2029.
Klingbeil's strategy involves closing loopholes and gaps in the tax system, with the aim of boosting government revenue and contributing to strict budget consolidation efforts across all ministries. The precise legislative reform details targeting tax evasion and undeclared work are not yet fully detailed, but the overall approach reflects a focus on growth, fairness, and safeguarding jobs.
The minister's plans include a legislative reform to combat undeclared work and tax evasion, as well as improved digital networking and data exchange between authorities for the Financial Control Authority. The Authority will also be integrated into the police information network, allowing for more effective detection and prevention of financial crimes.
The Financial Control Authority will be strengthened to combat serious economic crime and organized crime, with a particular focus on identifying "black sheep" among subcontractors, especially on large construction sites, and new hotspots of undeclared work, such as barbershops and nail salons.
While the exact figure for revenue generation from this planned crackdown is not explicitly stated, Klingbeil emphasizes that closing tax loopholes and fighting financial crime are key to increasing government revenues as part of the fiscal consolidation up to 2029. Some estimates suggest that the reform could result in around two billion euros in additional revenue for the federal government, states, and social security institutions by 2029.
Law-abiding companies can expect fewer inspections, while employers who enrich themselves at the expense of honest competitors, exploit employees, and harm the social security system will be targeted. Employees in the hairdressing and cosmetics industry must have their personal ID with them and present it upon request during customs controls, and employers must immediately report new employees to the pension insurance.
Klingbeil had already announced that he wants to strengthen the revenue side by intensifying the fight against tax evasion and financial crime, with the ultimate goal of generating significant additional revenue for the state through the reform. The minister's strategy reflects a commitment to fairness and economic growth, as well as a recognition of the need for strict budget consolidation in the years ahead.
Businesses and finance are essential components of Lars Klingbeil's strategy, as he plans to combat undeclared work and tax evasion, which are major sources of revenue loss for the government. To strengthen the Financial Control Authority, Klingbeil proposes improved digital networking and data exchange between authorities, aiming to identify and prevent financial crimes, thereby increasing government revenue and fostering economic growth.
