What is the Foreign Trade and Payments Ordinance?
The Foreign Trade and Payments Ordinance (AWV) is a legal regulation that first came into force in 1961 and was issued based on the Foreign Trade and Payments Act (AWG). It contains rules for the regulation of foreign trade, procedural and reporting regulations, and penalty and fine regulations.
The AWV is subject to constant adaptation to the requirements of foreign trade.
What is the relationship between the AWG and AWV?
In terms of the separation of powers (legislative, executive, judiciary), the Foreign Trade and Payments Act is passed by the legislative power (legislative = German Bundestag). According to the law, the executive power (executive = federal government and subordinate authorities) is entitled to issue ordinances in areas defined in the Foreign Trade and Payments Act.
The Foreign Trade and Payments Ordinance is such a legal ordinance. The judicial power (judiciary = courts) checks whether the executive action is permitted.
What does the Foreign Trade and Payments Ordinance contain?
In addition to general regulations, the AWV contains provisions on the export and import of goods, other trade in goods, services, capital and payment transactions as well as criminal provisions. It also includes several regulations on the enforcement of international embargoes.
The Foreign Trade and Payments Regulation is divided into 10 chapters:
- Chapter 1: General provisions
- Chapter 2: Export and transfer from the country
- Chapter 3: Import
- Chapter 4: Other freight transport
- Chapter 5: Trade in services
- Chapter 6: Restrictions on capital movements
- Chapter 7: Reporting requirements for capital and payment transactions
- Chapter 8: Restrictions against certain countries and persons
- Chapter 9: Criminal offences and administrative offences
- Chapter 10: Entry into force
The export list is attached to the AWV. The import list is an annex to the AWG. These lists contain goods which may only be traded internationally with a licence or under certain conditions.
Which authorities are responsible for the Foreign Trade and Payments Ordinance?
The licensing offices are derived from § 28 AWG. The Federal Export Office (BAFA) and the Federal Office of Economics (BAW) are named after the Regulation on Competence. The Deutsche Bundesbank is responsible for capital and payment transactions. The Federal Ministry of Finance (BMF) is also responsible for this area. For certain areas of service transactions (e.g. maritime transport), the Federal Ministry accountable for transportation is assigned responsibility.
What is the AWV notification requirement?
Since September 2013, foreign payment transactions (transfers to and from Germany) have to be reported to the Deutsche Bundesbank under Section 11 of the Foreign Trade and Payments Act (AWG) in conjunction with Sections 67ff of the AWV to control the flow of funds to and from abroad (foreign trade) and to record them in foreign trade statistics.
The reporting requirement applies to natural and legal persons with residence, domicile or registered office in Germany (resident persons). According to the Foreign Trade and Payments Ordinance, the reporting obligation includes cash payments, foreign payments by direct debit, cheques, foreign transfers in euros and foreign currencies, and set-offs and offsets.
If the amount falls below the limit of 12,500 Euro, it does not have to be reported. Foreign currencies are only required to be reported as foreign exchange transactions from an equivalent of USD 50,000. Also exempt from the reporting obligation under the Foreign Exchange Ordinance are imports of goods and export earnings as well as loans and deposits with a term of less than one year.
The necessary declaration according to §§ 67 ff. must be made directly by the ordering party of the payment via the Deutsche Bundesbank website using form Z4. According to the Foreign Trade and Payments Ordinance, a violation of the reporting obligation is an administrative offence punishable by a fine of up to 30.000 Euro.