Nationwide raids on nail studios – and on Uber? Why the state goes after illegal work with varying severity
On January 14, authorities searched over 1,000 locations in more than five federal states and executed several arrest warrants. The investigations target a network that for years allegedly smuggled in workers and engaged in illegal work.
According to authorities, the focus of the operation was in North Rhine-Westphalia, Baden-Württemberg, Bavaria, Hesse and Lower Saxony. In total, 49 residential and commercial premises were searched. The investigators conducted searches in Düsseldorf, Cologne, Dortmund, Stuttgart and in the Darmstadt-Dieburg district. Three arrest warrants were executed; the main suspicion centers on a 56-year-old man from Düsseldorf. Two further arrests involved nail-studio managers aged 36 and 44. Investigations are ongoing against around two dozen more suspects.
The investigative authorities accuse the main suspect of commercial- and gang-related smuggling of foreign workers, withholding of wages and tax evasion. According to this, Vietnamese nationals were allegedly employed without valid residence permits. Through undeclared wages and revenues, as well as unpaid social security contributions, a loss of more than seven million euros has been incurred.
Parallels to the platform operators?
In German city centers, mobile apps from Uber, Bolt and Co. are increasingly shaping the image of passenger transport. The taxi industry has for some time criticized the business model of these platform operators—not least with regard to tax and social security standards. A central subject of the debate is the question of how the low fares that Uber and Bolt regularly offer in Germany can be reconciled with the existing legal framework.
Low prices through undeclared work
Authorities such as the Berlin customs authorities have publicly admitted that the rental-car rides mediated via intermediary platforms are offered at prices that, in their assessment, would only be possible through “contribution withholding and undeclared work.” In a session of the Berlin House of Representatives it was argued that a third of the revenues are officially accounted for, a third through undeclared work, and a third through illegal payments to the drivers — that is, without paying the usual social security contributions. The taxi industry has long been calling for minimum prices for rental cars to be enforced, in order to prevent the displacement of regular taxi companies and to stabilize competition.
Structural problem of the platform economy
These accusations are embedded in a larger structural problem of the platform economy: The drivers are often employed through subcontractors or rental car companies that have a close contractual relationship with the intermediaries. Such constructions frequently contribute in practice to taxes, payroll-related costs and social security contributions not being paid in full, whether through the use of mini-jobs, marginal employment or informal payments. In some cases, during official inspections, falsified driver's licenses, insufficient permits and missing contributions came to light, as a result hundreds of vehicles were removed from mediation platforms and investigations were initiated.
More than just isolated cases
Critics from the taxi industry see in this practice more than mere isolated violations. They argue that the market for rental cars with drivers is structurally designed to push costs onto employees and social security systems in order to gain a competitive advantage over traditional taxi companies. Industry representatives point to estimates, for example, that in Munich alone the social security contributions by private rental car operators amount to millions, thus being diverted from the public purse.
The platform operators themselves continue to counter that they are legally only intermediaries and that compliance with legal requirements is contractually demanded from the partner companies. Violations by individual rental car providers would be sanctioned and could lead to exclusion from the mediation network, according to statements.
Raid at nail studios
The raid on nail studios is part of a series of nationwide measures through which the German customs authorities, together with police and judiciary, are taking action against illegal work and undeclared employment relationships. These operations have increased in recent years, not least due to rising political pressure to curb tax losses and distortions of competition.
Authorities are hesitant about Uber and Co.
The ongoing debate about tax fraud and social dumping at Uber, Bolt and other intermediary platforms illustrates how digital business models challenge state regulatory mechanisms. The legal classification of the employment situation of driving personnel remains controversial. Issues of false self-employment and the delineation under social security law are also not limited to Germany, but are discussed in EU-wide platform work.
The ongoing implementation of the European Union's Platform Directive aims to create in the future a clearer legal basis for genuine employment relationships in the gig economy. This could also make the tax and social-security obligations more transparent. Until then, Uber and Co. are creating facts. Facts that threaten the taxi trade's existence.
Why not a nationwide approach against Uber & Co.?
An aspect not to be underestimated for the noticeable reluctance of policymakers to curb the wild growths of platform operators could be their extensive lobbying in Berlin and Brussels. Moreover, the regulations for a business like a nail studio are quite simple and nationwide uniform, whereas in the taxi trade it is notoriously more complicated:
In Germany, the taxi trade is subject to a complex web of regulations at different levels. The decisive provisions come from the federal government: The Passenger Transport Act (PBefG) specifies who may operate taxis or rental cars, which permits are required, and how taxis and rental cars are to be distinguished. It also provides for tariff binding for taxis as well as the obligation to transport and to operate.
The federal states implement these regulations. They are responsible for licensing procedures and for enforcing federal law. Through state regulations they can regulate details, but they cannot introduce fundamental deviations from the PBefG. The supervision of the operators also rests with the state authorities, which carry out inspections and sanction violations.
The municipalities have within this framework another margin of discretion. They set concrete tariffs, determine mandatory service areas, and enact local taxi regulations. Here, among other things, it is regulated how taxi stands are organized and which minimum requirements apply to vehicles and drivers.
At the European level there are only framework conditions. The EU influences the taxi trade through competition and services law, but there are no concrete requirements for taxis or rental cars. German law remains largely sovereign in this area.
Content automatically translated.Taxi-Fahrzeuge (Pkw) , Taxi-Newsletter, Taxameter, Taxi-Fahrer , BZP – Deutscher Taxi- und Mietwagenverband , Straßenverkehrsordnung (StVO) , Krankenbeförderung , Weiterbildung , Taxi-Konzessionen , Verkehrspolitik , Mietwagenbranche , Taxi-Apps , Berufskraftfahrer-Qualifikations-Gesetz BKrFQG) , Taxizentralen , Personal, Gehälter, Arbeitsschutz , Wirtschaftsnachrichten , Werbung , Taxi-Folierung , Taxi-Umrüster , Straßenverkehr , Elektromobilität, Taxifuhrpark und -flottenmanagement , Taxi-Versicherungen , Hybrid, Diesel, Erdgas , Taxi-Magazin