Quadrupled Penalties – Germany to tighten scheme for corporate fines

Germany is moving to substantially tighten its corporate sanctions regime. A draft bill adopted by the federal government in late April proposes to raise the maximum fine for companies in cases of white-collar crime. For intentional offences committed by senior managers, the ceiling would increase from €10 million to €40 million; for negligent conduct, it would rise from €5 million to €20 million.

The reform is primarily driven by the need to transpose the EU’s 2024 directive on environmental crime into German law. However, the draft goes well beyond environmental offences. It extends the higher penalty thresholds to all crimes that can be attributed to companies under the Administrative Offences Act, including fraud, corruption, sanctions breaches and money laundering. Existing rules allowing authorities to confiscate profits derived from wrongdoing remain in place, meaning that overall financial exposure for companies may in practice exceed the statutory maximum fine by a significant margin.

The legislative process is still ongoing and requires approval from both the Bundesrat and the Bundestag. Given the EU’s implementation deadline of 21 May, the proceedings are widely expected to be accelerated. The reform also reflects a broader policy view that existing corporate penalties—last increased more than a decade ago—are no longer sufficient. In addition, Germany is aligning itself with evolving EU standards, which increasingly set high minimum levels for corporate sanctions, particularly in areas such as sanctions enforcement and anti-corruption.

A key innovation of the bill is the introduction of binding criteria for determining corporate fines. In the future, prosecutors and courts would be required to take into account factors such as the seriousness of the offence, the company’s financial circumstances, and its conduct after the wrongdoing comes to light. This includes efforts to investigate misconduct internally, cooperate with authorities, remediate damage and implement effective compliance measures to prevent future violations.

Clearer statutory guidance is intended to improve predictability and help companies better evaluate the benefits of cooperation and self-reporting. However, the same time, the draft does not introduce a defined starting point or benchmark for fines. As a result, significant discretion will remain with prosecutors, who may differ in how they weigh the various factors.

More broadly, the proposal illustrates a gradual shift in recent German enforcement practice. While the legal framework still formally focuses on administrative liability of companies rather than criminal liability, the increasing scale of fines and the growing importance of compliance and internal investigations point toward a system that places greater direct responsibility on corporations. This development is also influenced by continued EU harmonisation efforts, which are expected to further shape national rules on corporate liability in the coming years.