Quite a lot.
Here is an excerpt from undeclared work on the construction
Criminal consequences for clients
Section 8 SchwarzArbG treats the client and the employee equally.The client of undeclared work is therefore also threatened in accordance with Section 8 para. 3 SchwarzArbG fines up to EUR 50,000.
Although the contracting authority does not commit tax evasion itself, it is possible to grant aid for tax evasion in accordance with Section 370 AO, 27 StGB, possibly even complicity under Section 370 AO, 25 para.2 StGB. The punishment will usually have to be mitigated in relation to the main offender, but is still quite sensitive.
Civil consequences of undeclared work
In the wake of the newly introduced Undeclared Labour Act, however, the case law has also taken a remarkable reorientation.For a long time, the question of contractual relations between the parties was considered separately from the question of whether there had been a breach of public law rules.
In other words, even if it was undeclared work, the contractor could, in certain circumstances, claim his work wages and assert the client’s warranty rights in court.
The Federal Court of Justice (BGH) has carried out the reorientation in a chain of decisions from 2013.In 2013, the BGH, in amendment to its old case law, decided that the client of a work service performed in black was not entitled to any warranty claims ( BGHAz. VII ZR 6/13).
The judgment was based on a situation in which the client had her driveway paved.To a work wage, which had been agreed in cash, without invoice and without deduction of vat. The agreed wage appeared to be a fraction of the local rate. After the plaster did not have the necessary strength, the customer demanded an advance for the rectification costs of more than 鈧?,000 鈥?with an order volume of only 鈧?,800. The Landgericht Kiel ruled on the plaintiff at first instance, but the OLG Schleswig and the BGH gave the defendant construction company.
According to the current case law of the Federal Court of Justice, the violation of Section 1 schwarzArbG results in the construction contract being void due to a violation of a legal prohibition in accordance with Section 134 of the German Civil Code (BGB).No rights can be derived from a void contract, it does not exist, so to speak, or does not exist. is considered never completed. Also in good faith according to Section 242 of the German Civil Code (BGB) no claims against the alleged contractual partner can be derived.
Another conceivable gap was closed in 2015.In June 2015, the BGH ruled that the client who has already paid the work wage in black cannot claim it back from the contractor if the work was defective (BGH Az. VII ZR 216/14).
In the decided case, the customer had commissioned the contractor to carry out roof works.A remuneration of 10,000 euros was agreed, which was to be paid without VAT. After the work had been carried out, the entrepreneur presented his invoice without a VAT card, which the customer paid. After the customer noticed defects, he demanded repayment of 8,300 euros. He was awarded this amount before the Higher Regional Court. The BGH cashed in on this decision and dismissed the claim an action brought by the customer.
In the opinion of the BGH, in accordance with Section 817 sentence 2 of the German Civil Code (BGB), compensation under enrichment law cannot be required if the client has violated a legal prohibition with his contractual appointment.This is now to be the case in the case of a “no-invoice agreement” for the violation of Section 1 SchwarzArbG.
In other words, if defects in the works performed occur at a later date, the client has no claim for rectification, replacement, reduction, compensation or repayment of the work wage already paid to the Contractor.The contracting authority is left alone by the courts on the basis of the illegal agreement, and a corresponding action would be dismissed.
Conversely, the case law also consistently leaves contractors in the rain with their wage demands.In 2014, the Federal Court of Justice ruled that an entrepreneur who has deliberately violated the Schwarzarbeitergesetz (SchwarzArbG) cannot demand payment for his work (BGHAz. VII ZR 241/13).
The defendants had electrical work carried out by the plaintiff and agreed in the construction contract: “5,000 鈧?settlement according to agreement”.The agreement was that only part of the flat rate should be charged and a further 鈧?,000 in cash would flow without an invoice. The contractor sued for the remaining remuneration and lost on appeal (OLG Schleswig) and revision (BGH).
This decision is in line with the judgment of BGH VII ZR 6/13, which has already been cited.The BGH comments that the electrician does not receive any money for his work with the clear words: “Anyone who deliberately violates the anti-undeclared work law should remain defenceless according to the intention of the legislator.”
The violation of Section 1 of the SchwarzArbG has already led, according to previous case law, to the fact that the construction contract was terminated due to a violation of a legal prohibition in accordance with theSection 134 of the German Civil Code (BGB). As a result, the contractor has not been able to claim the payment of black money in a contractual way. With the cited decision of 2014, however, the BGH has decided that there is no claim to enrichment law either.
In principle, the client is enriched by the services of the contractor and the enrichment would have to be issued by the client or if – as is typical in the case of construction work – this is not possible, will compensate for the value.
At this point, the BGH has changed its case law and now considers that, in accordance with theSection 817 sentence 2 of the German Civil Code (BGB) cannot be required to compensate for enrichment law if the contractor has violated a legal prohibition with his performance. Paragraph 1 Of the SchwarzArbG now constitutes such a prohibition, according to the BGH.
The decision cited points to another problem:
In the case to be assessed by the BGH, the contracting parties had agreed, in addition to the written contract, an additional cash payment of 鈧?5,000 – for which no invoice should be invoiced.Thus, no VAT would have been paid for this amount of 鈧?,000. The prohibited ex-post ancillary agreement also infected, to a certain extent, the regular main order, and the commission was regarded as a single contract, which falls within the following oral amendments under Section 1 of the SchwarzArbG.
This view was reaffirmed by the BGH with a decision in 2017 (BGH Az. VII ZR 197/16).
The client of carpet laying work demanded the repayment of the wages paid of EUR 15,019.He had resigned from the contract because of defects in the work. Originally, the parties had agreed on a working wage of EUR 16,164. A short time later, they agreed that the entrepreneur should only charge an invoice for EUR 8,619. A further 6,400 euros should be paid in cash and without invoice. The invoice amount was transferred by the client, the remaining amount flowed as agreed in cash. The decision of the Federal Court of Justice: The “no-invoice agreement” nullify the entire contract.
The client cannot demand any repayment because the contract is void due to violation of the Black Labour Act (SchwarzArbG).These principles apply in the same way where a contract which is not initially contrary to a legal prohibition is subsequently amended by a ‘no-invoice agreement’ to infringe the prohibition on undeclared work.
As a consequence, one can only strongly advise the builders and clients, as well as the builders and craftsmen, against undeclared work.The consequences can be sensitive and painful for both contractors and contractors. In addition to prosecution with fines and fines up to prison terms, the civil consequences occur. The case law places both parties largely defenceless. Often, however, when undeclared work is agreed, it is not yet clear what this can have in the case of significant effects.