In Germany, international payments are subject to a statutory reporting obligation. Below, we’ll explain when merchants need to report payments, and what this reporting obligation entails.

What’s in this article?

• What is the foreign payments reporting obligation?
  
• What does the note “Observe the foreign payments reporting obligation” mean?
  
• Who needs to report payments?
  
• What are some exemptions from the AWV reporting obligation?
  
• Where and how are payments reported?
  
• What reporting deadlines apply?
  
• What happens if you do not comply with the reporting obligation?
  

What is the foreign payments reporting obligation?

Under Germany’s Foreign Trade and Payments Ordinance (“Außenwirtschaftsverordnung” or “AWV”), businesses and private individuals must report international money transfers involving amounts greater than 12,500 euros.

The primary aim of this reporting obligation is to record international transactions and gather statistical data on cross-border payment flows. The intended purpose of the reporting obligation is to ensure compliance with foreign trade and payment regulations. To this end, it represents a key instrument in German foreign trade policy, enabling the trading of goods and monetary transactions with other countries to be monitored and controlled.

However, there is a certain amount of overlap between the Money Laundering Act (“Geldwäschegesetz” or “GwG”) and the Foreign Trade and Payments Ordinance (AWV). It is particularly important for merchants to be familiar with the statutory regulations for international payment transactions in order to avoid legal problems in their business activities.

What does the note “Observe the foreign payments reporting obligation” mean?

When transferring funds to or from abroad, banks automatically issue a reference to the foreign payments reporting obligation, regardless of whether the value is more or less than 12,500 euros. The note “Observe the foreign payments reporting obligation” is generally shown in online banking and is also printed on many bank statements.

It is also irrelevant whether you, as the merchant, are actually subject to the reporting obligation. For the bank, this reference simply serves as a safeguard to ensure it is formally exempt from liability. As a merchant, you are responsible for checking whether a monetary transfer through your account is subject to the reporting obligation.

Who needs to report payments?

Essentially, any person with a place of residence, domicile, or company headquarters in Germany must comply with the AWV reporting obligation in connection with international payments. Anyone meeting these requirements who receives a payment of more than 12,500 euros from abroad needs to report this payment, regardless of whether they hold German nationality. Payments to foreign countries are generally reported by the instructing bank.

The Foreign Trade and Payments Ordinance does not differentiate between private individuals or businesses: everyone needs to observe the reporting obligations and, where relevant, report payments.

What types of payment are subject to the AWV reporting obligation?

There are various types of international payment. The reporting obligation applies to amounts greater than 12,500 euros in the following transactions:

• Foreign money transfers
  
• Foreign payments by check, exchange, or direct debit
  
• Cash payments to a foreign account
  

Note: When an international money transfer represents part of a larger amount—for example, in the case of settlement—it is the overall amount that needs to be reported. This also applies to credits and loans between domestic and foreign parties. Payments for foreign investments also need to be reported.

What are some exemptions from the AWV reporting obligation?

Transfers of less than 12,500 euros (including in other currencies) are not subject to the reporting obligation. This is the case even if the same person makes two transfers of 12,400 euros, for example. However, anyone transferring an amount subject to the obligation in multiple smaller payments needs to report the overall amount. Any infringement of this rule will be sanctioned with a fine, as it constitutes a deliberate circumvention of the obligation.

However, paying a subscription to a foreign service provider in regular smaller amounts is not subject to the reporting obligation.

Other exemptions also apply:

• Revenues from product imports (e.g., ordering and paying for products from abroad through eBay is not subject to the reporting obligation)
  
• Payments received for exported goods
  
• Credits and deposits with a term of less than 12 months (e.g., overnight funds or fixed-term deposits from a bank based abroad)
  

Where and how are payments reported?

Payments subject to the AWV reporting obligation must be reported to Deutsche Bundesbank, using its dedicated reporting form and online foreign payments reporting platform.

Merchants can register themselves on the Bundesbank’s General Statistics Reporting Portal and then report payments.

Alternatively, you can, as a business, also send an email to szawstat-dtazv@bundesbank.de to report a payment. However, you should ensure that your email contains the following information in order for the report to be received correctly:

• Your full name
  
• Where relevant, the company name
  
• Country of origin (if receiving) and destination (if sending)
  
• Purpose of the money transfer
  
• Amount transferred
  
• Your contact details (email and telephone number)
  
• Report number (if available)
  

Tip: The report number can be requested using a Deutsche Bundesbank form. Send the completed form by email to Deutsche Bundesbank at aw-stammdaten@bundesbank.de.

Make sure that any information you submit online or by email is correct to avoid delays and queries.

What reporting deadlines apply?

Payments must be reported or declared by the seventh day of the calendar month following the foreign transfer. For example, if a merchant executes a foreign money transfer on April 23, it must be reported by May 7.

One particular feature of the reporting deadline is that in the case of recurring payment obligations—for example, in connection with a contract—payments need to be reported within 14 days of the contract date. When a contract runs for several years, the payments need to be reported again each year.

It is essential that these reporting deadlines are respected, otherwise fines or other sanctions may be imposed. Deadline extensions are generally not possible. If a merchant forgets to report one month, they should correct this as quickly as possible to avoid a fine. When reporting, they should indicate the month in which the money transfer took place.

However, as reporting deadlines can also change, merchants needing to report payments should always check the current regulations and reporting periods for the AWV reporting obligation on the Deutsche Bundesbank website.

What happens if you do not comply with the reporting obligation?

It is important to take the reporting obligation seriously to avoid legal problems and financial consequences. Failure to comply with the reporting obligation is an administrative offense and can be penalized by a fine of up to 30,000 euros. The size of the fine depends on the severity of the infringement. The amount is determined by the competent authority.

Deutsche Bundesbank also insists that mandatory reports are made retrospectively. Failure to do so can result in additional sanctions for the merchant, including criminal prosecution. Sanctions vary and are determined by the competent authorities and courts in each individual case.

In order to guarantee compliance and fulfill due diligence, merchants should ensure that all applicable laws and regulations are observed—in particular, the regulation governing the AWV reporting obligation. However, the Foreign Trade and Payments Ordinance may also be updated along with its reporting obligations. Therefore, merchants should always look for the current regulations to be on the safe side when making a foreign money transfer. For example, the Foreign Trade and Payments Ordinance can be affected by developments within EU countries and merchants in Germany may, in some circumstances, find themselves subject to new regulations in respect to the AWV reporting obligation.

The specific details of the Foreign Trade and Payments Ordinance and its reporting obligation can be highly complex. In the case of uncertainty regarding an international transaction, it is advisable to seek legal advice to ensure that all statutory obligations are met. If you have specific questions on the AWV reporting obligation, you can also contact Deutsche Bundesbank directly.

If you have regular economic relations with companies abroad, it is also always advisable to establish a due diligence process when vetting business partners—this applies in particular to larger companies.