Concept and significance of personal economic interest
The term “personal economic interest” is a legally relevant term that is used in various areas of German and European law. It refers to the individual effort of a natural or legal person to pursue or secure their own economic advantages. The personal economic interest can be of considerable importance for the justification, scope, and limitation of rights, duties, and legal responsibilities. In numerous substantive and procedural areas of law, personal economic interest is a central criterion for differentiation, particularly when it comes to the legitimacy of claims, standing to sue, standards of liability, and conflicts of interest.
Legal foundations and areas of application
Civil law
In civil law, personal economic interest is a central criterion in determining entitlements to claims, legal positions, and the structuring of claims for damages.
Entitlement to claim
As a rule, a person has entitlement to a civil law claim only if they themselves are affected by a violation of legal rights, i.e. if they can demonstrate a personal economic interest in the protection of the affected good. Examples include the protection of ownership and possession, in which the claimant must assert their own economic disadvantage resulting from infringements on their legal position.
Third-party damage liquidation
A typical case of application for personal economic interest arises in third-party damage liquidation: Here, a person can only assert claims for damages against a tortfeasor if they have a personal economic interest in asserting the third party’s damage. A distinction is generally made between hidden and overt transactions for another’s account, with personal economic interest being decisive for enforcing the claim.
Agency without authority (GoA)
In the context of agency without authority (§§ 677 ff. BGB), personal economic interest plays a role in distinguishing between genuine and non-genuine agency. Anyone who conducts a transaction out of personal economic interest, but pretends to act in the interest of another, cannot invoke the rules of GoA.
Corporate law
In corporate law, the personal economic interest of shareholders serves as the basis for the assumption of certain powers and for defining the limits of fiduciary duties. In particular, when managing and representing a company, actions must be based on a personal economic interest. If a manager or shareholder exceeds this interest in favor of third parties, they may be in breach of corporate obligations.
Administrative law
In administrative law, personal economic interest serves as a criterion for distinguishing subjective public rights, especially in connection with the standing to sue under § 42 (2) VwGO. In principle, the claimant must be able to assert that they have been injured in their own rights (and thus ultimately in their personal economic interests) by the administrative act. Pure general interests or third-party interests generally do not establish standing to sue.
For example, personal economic interest is significant in construction law when neighbors wish to challenge building permits. The decisive factor is whether they are affected in their own rights protected by public building law.
Competition law and antitrust law
In competition and antitrust law, personal economic interest is used to legitimize standing to sue for competitors. For instance, a competitor can only assert cease-and-desist and removal claims under §§ 8 ff. UWG if they, as a competitor, have a personal economic interest in compliance with market conduct rules. The assertion is not made to protect the market in general, but out of the competitor’s own, direct economic concern.
Criminal law
In criminal law, the existence of personal economic interest can be significant when evaluating elements of criminal offenses, especially in anti-corruption law. For example, receiving an advantage (§ 331 StGB) may not be punishable if an official acts within the scope of personal economic interest and the action does not relate to their public office.
Personal economic interest as a criterion for differentiation
Distinction from third-party interest
The distinction between personal economic interest and third-party (or altruistic) interest is crucial for allocating rights, duties, and responsibilities. In contrast to personal economic interest, third-party interest pursues advantages for others. The precise assessment must always be based on the individual case, and can be highly significant in multi-party relationships (e.g., trust, management of affairs, agency, or GoA).
Practical case groups
- Trust relationships: In trust relationships, it must be clarified whether the trustee acts mainly in the interest of the settlor or in their own economic interest.
- Asset management: If asset managers exceed personal economic interest, it constitutes a breach of the duty of care and loyalty.
- Representational activities: If a representative acts exclusively on behalf of others, there is no personal economic interest; however, such interest may arise in mixed situations.
Significance of personal economic interest in legislation and case law
Case law and legislation often refer to the concept of personal economic interest to clarify questions of differentiation, liability criteria, and entitlement to claims. A personal economic interest often forms the standing for lawsuits and claims and is a prerequisite for the assumption of a legal relationship. The assessment is usually objective and independent of subjective motivation, provided a clearly attributable personal economic interest can be established.
Summary and legal assessment
Personal economic interest is a multifaceted characteristic relevant in numerous areas of law for determining rights, obligations, and claims. In particular, it serves to distinguish third-party interests, influences entitlements and standing to sue, and is decisive for attributing acts and omissions. Due to its cross-sectional relevance in corporate, civil, administrative, and competition law, the precise determination and assessment of personal economic interest is essential in each individual case. In legislation and case law, personal economic interest is therefore assigned a central role in the protection of individual economic positions.
See also:
- Trust
- Agency without authority
- Legal standing
- Competitor lawsuit
- Standing to sue
- Third-party damage liquidation
Frequently Asked Questions
When does a personal economic interest exist in the legal sense?
A personal economic interest exists from a legal perspective whenever an act, behavior, or legal transaction primarily serves the economic advantage of the acting person or organization. This typically includes all activities aimed at generating profit, increasing assets, saving costs, or otherwise creating material benefits for one’s own economic sphere. A personal economic interest is regularly presumed once the actor is engaged in a personal economic context, such as being an entrepreneur, contractual party in business, or asset manager. Such interest is particularly central in numerous areas of law, such as tax, civil, or competition law, and often forms the basis for the legal qualification of an act, for example regarding court jurisdiction, the applicability of certain provisions, or differentiating charitable from non-charitable or third-party purposes. The existence of personal economic interests can therefore have significant legal consequences, for example in questions of liability, the possibility of tax deductions, or the assertion of claims for damages.
How is personal economic interest considered in tax law?
In German tax law, personal economic interest is of decisive importance, particularly in distinguishing between business expenses and private expenditures as well as in demarcating for-profit from non-profit motives or applying certain tax advantages. The key aspect is whether an action primarily serves to promote one’s own income or whether a third-party interest exists. For instance, expenditures can only be deducted as business expenses if they are objectively connected to the generation of income and are made with personal economic interest. In cases of mixed motives—actions with both personal and third-party benefits—the predominant purpose must be differentiated. Courts and tax authorities regularly check whether the claimed expenditures can truly be attributed to business activity and not to the private sphere.
What role does personal economic interest play in competition law?
In competition law, personal economic interest is a central criterion for distinguishing entrepreneurial behavior under § 2 UWG (Unfair Competition Act). The rules of the UWG generally apply only when actions are taken “for the purposes of one’s own or another’s business”—that is, out of personal economic interest. Advertising activities, sales promotion campaigns, or business statements only fall within the scope of the UWG if they are aimed at promoting one’s own business interest or that of another. Pure courtesies or merely sovereign or charitable activities are generally excluded, as the required economic connection is missing. Thus, personal economic interest provides the legal standard for distinguishing between commercial activity and purely private or social activities.
What is the significance of personal economic interest for the liability of corporate bodies?
Personal economic interest also plays a decisive role in the liability of corporate bodies, such as managers or board members. According to the principles of corporate liability (§ 43 GmbHG, § 93 AktG), corporate officers are obliged to protect the interests of the company and prevent harm, provided they pursue not their own personal economic interest, but solely the interest of the company. However, if, in the course of management, a personal economic interest is pursued, for example in favor of themselves or a close third party, contrary to the interests of the company, this may constitute a breach of duty and thus result in personal liability. In such cases, careful balancing and disclosure of interests is required; otherwise, the officers risk liability for damages.
To what extent is personal economic interest relevant for charitable status?
The distinction between personal economic and charitable interests is decisive for recognition as a tax-privileged entity (§§ 51 ff. AO). An entity only pursues charitable purposes within the meaning of the Fiscal Code if its activities are selfless, exclusive, and directly benefit the general public, and do not primarily serve personal economic interests. As soon as an organization prioritizes its own economic benefits for its members or closely related individuals, charitable status is excluded. If this requirement is violated, there is a risk of losing charitable status with corresponding tax consequences and demands for back taxes.
Can a personal economic interest also exist for public authorities?
Public authorities generally pursue sovereign tasks and act in the public interest. In certain cases, however, particularly when providing services on the open market (for example, municipal enterprises or public tenders), authorities can also act with a personal economic interest. This regularly raises the question of whether the activities can still be attributed to a public purpose, or whether the authorities act in competition with private market participants, thus exhibiting a personal economic interest, which could lead to the application of certain commercial, tax, and competition law provisions.
What rules of evidence apply regarding the existence of personal economic interest?
The burden of proof for the existence or non-existence of personal economic interest generally lies with the party deriving legal consequences from it. In civil and tax law, the party claiming certain benefits—such as deduction of business expenses or charitable status—often bears the responsibility to demonstrate and prove the absence of predominant personal economic interest. Courts and administrative bodies regularly require objective evidence, such as contracts, invoices, or business records, in order to assess the true nature of the given action. Witness statements or merely subjective explanations are generally insufficient.
