Customs and Sanctions Law

Administrative offences in the customs area exist where violations are committed without intent or merely negligently. The central offence is negligent tax evasion pursuant to § 378 of the Fiscal Code (AO), which involves gross negligence: the perpetrator does not consciously reduce the duties, but is aware that their conduct is not correct.​

Pursuant to § 378 para. 1 AO, a person acts unlawfully as an administrative offence who, as a taxpayer or when handling the affairs of a taxpayer, negligently commits one of the acts referred to in § 370 para. 1 AO. The administrative offence may be punished with a fine of up to EUR 50,000 (§ 378 para. 2 AO).​
Further administrative offences are regulated in § 82 of the Foreign Trade Regulation (AWV) and concern in particular violations of EU sanctions regulations. The 2025 AWG amendment has significantly expanded the fine offences in § 82 AWV and now differentiates violations according to type and risk.​

In addition, §§ 30, 130 of the Act on Administrative Offences (OWiG) allow the sanctioning of companies with fines of up to ten million euros for intentional violations. With the 2025 AWG amendment, the maximum fine limits for companies in the event of sanctions violations have been raised to up to EUR 40 million (§ 19 paras. 7 and 8 AWG).​

The limitation period for prosecution of tax administrative offences is generally five years (§ 384 AO), while traffic administrative offences usually become time-barred within six months.​

Criminal offences exist where customs provisions are violated intentionally. The most important offences are:​
Customs evasion (§ 370 AO): Treated as equivalent to general tax evasion as a tax criminal offence, § 370 para. 1 AO provides for a fine or imprisonment of up to five years. In particularly serious cases pursuant to § 370 para. 3 AO, the sentence increases to six months to ten years’ imprisonment.​

A particularly serious case exists pursuant to § 370 para. 3 sentence 2 No. 1 AO in particular where the perpetrator “evades taxes on a large scale or obtains unjustified tax advantages on a large scale”. The Federal Court of Justice (BGH), in its landmark decision of 2 December 2008 (Az: 1 StR 416/08), tightened the sentencing for tax evasion and held that for the finding of “large scale”, an evasion amount of more than EUR 50,000 per year is sufficient.​
Prohibited import/export (§ 372 AO): This offence covers disregard of import, export or transit prohibitions. Anyone who brings goods across the German customs border in violation of prohibitions commits a criminal offence.​

Smuggling (§ 373 AO): Commercial smuggling constitutes an aggravated criminal offence with a custodial sentence of six months to ten years. In less serious cases, imprisonment of up to five years or a fine is threatened.​
The distinction between an administrative offence and a criminal offence depends primarily on intent and the intention to enrich oneself. If the responsible person acted deliberately in order to enrich themselves, a criminal offence is generally present. In the case of gross negligence without deliberate commission, the violation is assessed as an administrative offence.​

With the amendment to the Foreign Trade and Payments Act (AWG) in 2025, Germany responds to EU Directive 2024/1226 on sanctions criminal law and significantly tightens the legal framework. These changes have far-reaching implications for companies engaged in international trade.

New Criminal Offences and Higher Penalty Ranges

The reformed § 18 AWG restructures and further differentiates the criminal offences. In future, violations of transfer, trade, transaction, service and disposal prohibitions will be comprehensively sanctioned. The movement or use of frozen assets is also expressly covered.

Particularly significant is the new § 18 para. 6a AWG, which provides for a custodial sentence of six months to ten years in particularly serious cases. A particularly serious case is assumed in particular where:

• False or incomplete information is provided to a public authority regarding end use, transport route, recipient, sender, origin, buyer, seller, quantity or price
• Companies in third countries are used to conceal sanctions violations
• A third-country company or its management is financially or operationally dependent on the EU company

This particularly affects constellations in which EU companies exercise a controlling or dominant influence over third-country companies in order to circumvent export prohibitions.

Negligent Conduct Becomes Criminally Liable

A significant change is the criminal liability for negligent conduct in relation to dual-use goods. Pursuant to § 18 para. 2 AWG (draft), grossly negligent violations of sanctions prohibitions concerning dual-use goods may be punished with imprisonment of up to three years or a fine. This represents a substantial expansion of criminal liability, as previously only intentional violations were classified as criminal offences.

Drastic Increase in Fines

The maximum fine limits for companies have been quadrupled from the previous ten million euros to up to EUR 40 million (§ 19 paras. 7 and 8 AWG). This increase implements the requirements of the EU Directive and makes clear that compliance in foreign trade law must be of the highest priority.

Removal of the Grace Period

Previously, companies had two working days to adjust to new sanctions. This grace period will no longer apply in future. Companies must comply with new sanctions lists from the moment of their publication. This places high demands on a functioning compliance management system that must ensure immediate awareness of and compliance with new embargo requirements.

Extended Reporting Obligations

Reporting obligations are extended by a general “duty applicable to all” (§ 18 para. 5a AWG), from which legal advisory professions are exempted. Violations of this reporting obligation will in future be subject to criminal penalties.

The amendment expressly criminalises the concealment of assets by third parties to circumvent sanctions. In particular, it covers actions where attempts are made to circumvent EU sanctions via companies in third countries. Companies with subsidiaries in embargoed countries such as Russia must exercise particular caution: if the subsidiary violates an EU sanction, this can be attributed to the European parent company.

Russia Sanctions and Compliance Requirements

The extensive EU sanctions against Russia pose particular challenges for companies. The Federal Office for Economic Affairs and Export Control (BAFA) published new compliance requirements in May 2025, which specify what companies must do in dealing with the Russia sanctions.

Risk Analysis and Due Diligence Obligations

BAFA requires a systematic risk analysis with a focus on the following areas:

• Products: Identification of goods with high potential for misuse
• Trading partners: Review of irregularities in ownership structure or history
• Supply routes: Detection of detours or route changes indicating concealment
• Transactions: Comparison of payment routes and quantities with the stated use

This risk analysis must be regularly reviewed and updated, particularly in the case of new business partners, products or changed trade routes.

Internal Compliance Programmes (ICP)

To fulfil due diligence obligations, BAFA expects the implementation of an internal export control programme (ICP). This should include the following elements:

• Clear organisational and procedural structure
• Maintenance of records and retention of documents
• Personnel selection, training and awareness-raising
• Process-related and system-related controls
• Whistleblowing system
• Physical and technical security

The implementation of an ICP is not legally mandatory, but strongly recommended and is reviewed when applying for general licences. Pursuant to § 8 para. 2 sentence 1 AWG, the granting of an export licence may be made conditional on the reliability of the exporter.

No-Russia Clause and Export Prohibitions

The so-called “No-Russia Clause” obliges exporters to ensure that certain goods are not re-exported to Russia or Belarus. Violations of this clause are regulated in § 82 AWV as administrative offences and can be punished with substantial fines.

Since customs evasion is treated as equivalent to general tax evasion, the possibility of a penalty-exempting voluntary disclosure pursuant to § 371 AO also exists in customs law.

Requirements for Voluntary Disclosure

An effective voluntary disclosure requires the following conditions to be met:
Completeness: Pursuant to § 371 para. 1 AO, all non-time-barred tax offences of one type of tax, but at least all tax offences of one type of tax within the last ten calendar years, must be fully corrected. The BGH emphasised in its decision of 20 May 2010 (1 StR 577/09) that the voluntary disclosure must put the tax authority in a position to assess the tax correctly without any material intermediate steps.
Timeliness: The offence must not yet have been discovered. Pursuant to § 371 para. 2 No. 2 AO, a voluntary disclosure is excluded if the tax evasion has already been discovered and the perpetrator knew this or, on a reasonable assessment of the facts, had to expect it. The BGH defines discovery of the offence as present when the circumstances are such that it is probable, based on the facts identified, that this could justify a conviction.
Back payment: If the perpetrator has already obtained tax advantages prior to the voluntary disclosure, exemption from punishment pursuant to § 371 para. 3 AO is conditional on the perpetrator actually paying the evaded taxes (and, where applicable, certain interest). This must occur within a specified deadline.
No blocking grounds: No grounds for exclusion may be present.

Limits of Exemption from Punishment

Pursuant to § 371 para. 2 No. 3 AO, voluntary disclosure is in principle excluded where the evaded tax or the unjustified tax advantage obtained exceeds EUR 25,000 per offence. For higher amounts, prosecution may only be waived upon payment of a corresponding surcharge:

• Over EUR 25,000: 10% surcharge
• From EUR 100,000: 15% surcharge
• Over EUR 1 million: 20% surcharge

Not Applicable to Other Criminal Offences

Important: the penalty-exempting voluntary disclosure applies only to customs evasion (§ 370 AO). It does not apply to offences under § 372 AO (prohibited import/export) or § 373 AO (smuggling), nor to other criminal offences committed in connection therewith, such as document offences.

Professional Guidance Required

A voluntary disclosure is a highly complex legal instrument where errors can have serious consequences. The disclosure must be complete and timely; otherwise, investigative proceedings will be initiated without achieving exemption from punishment. Reef Legal advises you comprehensively on the requirements and accompanies you in preparing and submitting an effective voluntary disclosure.

At Reef Legal, we combine sound legal expertise with a pragmatic, client-oriented approach. Our team of experienced lawyers and solicitors has comprehensive knowledge of customs law, sanctions law and foreign trade law.

We advise and represent you in all matters:

• Defence in administrative offence and criminal proceedings concerning customs evasion, prohibited import/export, smuggling and sanctions violations
• Representation in customs audits and negotiations with principal customs offices
• Preparation and support with penalty-exempting voluntary disclosures
• Advice during searches by customs investigation and tax investigation units
• Compliance advice on the avoidance of violations
• Implementation of export control programmes and compliance management systems
• Advice on BAFA licensing procedures and export control
• Defence against revocation or refusal of customs authorisations and AEO status