Prohibition of business due to unreliability
Freedom of business exists in Germany. Any natural or legal person is free to carry out a trade. However, should the person carrying out the business be unreliable, the authorities are entitled to prohibit the carrying out of the trade in full or in part.
- In case of trades requiring a licence the authorities will revoke it.
- In case of trades which do not require a permit, the carrying out of the commercial activity will be prohibited.
These measures are for the protection of the public and employees in the business.
Note: The prohibition of the business is the strictest measure. Before this, the authorities can issue a warning or determine constraints for the carrying out of the business.
The lower administrative authority (Untere Verwaltungsbehörde)
The lower administrative authority is the city council (Stadtverwaltung) or the rural district office (Landratsamt) depending on the location of the premises where the trade is carried out.
- You are unreliable for the business carried out and
- no improvement is expected in the immediate future.
Note: In case of legal persons (such as GmbH), the consideration of unreliability relates to the persons entitled to represent.
As an example, you will be considered as unreliable for a business in the following cases:
- Proceedings are currently in force against you due to one or more criminal or administrative offences in connection with the operation of a business.
- You do not comply with your tax and social security obligations (for example in case of illegal employment)
- Due to insufficient economic performance capability, you have repeatedly not paid invoices
- You endanger public safety and order (for example because you do not comply with food hygiene regulations)
In most cases, the authorities begin the investigations following reports which have been made. As an example, the reports can be made by
- other authorities (such as the Agentur für Arbeit, tax office)
- social security providers (health insurance company, professional co-operative)
- other natural and legal persons (such as employees, creditors)
Note: The authorities must also investigate anonymous reports.
Should the authorities commence proceedings for the revocation of your business permit or prohibition of trade, you will receive a written notification with reasons.
The authorities will investigate as to whether facts are present which substantiate unreliability on your part. The authorities can also obtain statements from the competent chamber of industry and commerce or chamber of craftsmen. Then you can make a statement concerning the matter.
Should the authorities prohibit trading, this will be noted in the central business register.
The authorities can also suspend or discontinue proceedings if
- during the proceedings, the alleged reason for prohibition no longer exists and
- the authorities are convinced that you will manage the business in a reliable manner in the future.
Should the prohibition be legally recognised, the recommencement of these commercial activities can be applied for a year later at the earliest. Only if special reasons are present can the authorities allow recommencement earlier.
The amount of the charges is in accordance with the cost regulations of the municipality or the cost ordinance of the district office.
Varies, in most cases more than six months.
The German original version of this text was drafted in close cooperation with the relevant departments. The Wirtschaftsministerium released it on 20.10.2017. Only the German text is legally binding. The Federal State does not assume any liability for the translated texts.
In cases of doubt or if you have any questions or problems, please contact the relevant authorities directly.