Prostitution has been legal in Germany since 2002 and with the “Prostitute Protection Act” (Prostituiertenschutzgesetz, ProstSchG for short) the legislature formulated extensive special regulations for the prostitution industry and sex workers in mid-2017.
The ProstSchG sets up a comprehensive catalog of duties - with a registration requirement for prostitutes and authorization for operators. In addition, the law has a large number of documentation and record-keeping obligations, with the help of which the respective authorities want to gain better insight into red light districts and create transparency.
In recent years, there has been an increase in proceedings before the tax and criminal courts against brothel operators and prostitutes for tax evasion (Criminal tax law LINK), withholding of income tax and social security contributions (Criminal labor law LINK). For those affected, years of incorrect handling of tax obligations harbors a high liability risk for tax arrears as well as criminal law consequences often with high prison sentences.
With the implementation of the ProstSchG at the state level, the financial and regulatory authorities have new supervisory and monitoring instruments at hand, which enable more comprehensive control and monitoring of the prostitution industry, and a further increase in proceedings can be expected.
The increased duties and stricter regulation of the sex industry requires brothel operators and sex workers to be more careful. Precautions are now imperative to protect the company, the employees and the operator. Such an approach with the aim of avoiding rule violations and sanctions is known as “compliance”. Brothel compliance relies on an analysis of the operations, adjustment to the legal requirements and cooperation with authorities – such as tax offices, regulatory authorities and pension insurance institutions to ensure commercial and tax regulations are upheld.
H2W offers comprehensive brothel compliance consultation for the prostitution industry and sex workers. The examination of internal structures as well as tax and criminal law risk analysis offer protection against liability and criminal liability risks.