BFH: Inspection authority of the customs administration under the Minimum Wage Act towards foreign employers

Employers based in another EU member state whose employees work in Germany are obliged under the Minimum Wage Act (MiLoG) to tolerate an audit by the customs administration of the type and scope of work performed in Germany.

Decision of the Federal Fiscal Court (Bundesfinanzhof, BFH) with three judgements dated 18 August 2020 – VII R 34/18, VII R 35/18 and VII R 12/19.

In the mentioned cases, foreign transport companies had submitted declarations in accordance with the Minimum Wage Reporting Ordinance and had carried out so-called cross-border transports. In these cross-border transports, either only the unloading or only the loading took place in Germany. In some cases, it was disputed between the parties whether such transports had taken place at all or whether the drivers of the foreign transport company had not merely been engaged in so-called transit transport, i.e. had only passed through Germany.

In order to clarify these cases, the main customs office issued audit orders with reference to the MiLoG and requested the employers to submit employment contracts, pay slips and working time records, etc. The foreign employers filed a complaint against this. The foreign employers filed a complaint against this. They argued that the MiLoG was not applicable to foreign transport companies. In addition, they argued that it violated the federal system of competences, the constitutional requirement of certainty and EU law because of the customs authorities’ audit powers. The appeals were unsuccessful.

The BFH has now rejected the applicants’ appeals as unfounded and ruled that the disputed audit orders and the associated requests for the submission of documents were lawful. In particular, it had been permissible under Article 87(3) sentence 2 of the Basic Law for the federal legislature to confer powers on the customs administration to verify an employer’s compliance with its obligations under section 20 of the MiLoG. On the other hand, the disputed question of whether short-term employment was covered by the MiLoG at all was irrelevant, because irrespective of this problem, the customs authorities had to be able to determine in the first place to what extent the workers concerned were or had been actually employed in Germany.

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