Definition and Legal Basis of Handicrafts Exempt from Licensing
Handicrafts exempt from licensing is a central term in German trade law and refers to craft activities that are not subject to the obligation of entry in the Register of Crafts pursuant to § 1 para. 2 in conjunction with § 18 of the Crafts Code (HwO). The distinction from crafts subject to licensing as outlined in Annex A of the HwO is crucial for the legal classification and the requirements for exercising certain trades. Crafts exempt from licensing are regulated in Annex B Section 1 of the Crafts Code. Special legal frameworks apply to them, which will be explained in detail below.
Classification and Distinction
Crafts subject to licensing versus crafts exempt from licensing
The Crafts Code fundamentally distinguishes between crafts subject to licensing (Annex A), crafts exempt from licensing (Annex B Section 1), and craft-like trades (Annex B Section 2).
- Crafts subject to licensing are subject to a master craftsman obligation for entry in the Register of Crafts.
- Crafts exempt from licensing on the other hand, can be operated independently without proof of a special artisanal qualification.
- Craft-like trades are trades that are technically or practically related to a craft but are not considered crafts within the meaning of the Crafts Code.
Annex B Section 1 HwO: Crafts Exempt from Licensing
Examples of crafts exempt from licensing according to Annex B Section 1 HwO include:
- Tilers, slab and mosaic layers
- Interior decorators
- Building cleaners (since 2020 again subject to licensing)
- Photographers
The specific list is subject to changes by legislators or regulations from time to time.
Requirements for the Practice of a Craft Exempt from Licensing
Business registration
A craft exempt from licensing does not require entry in the Register of Crafts. However, pursuant to § 14 of the Industrial Code (GewO), registration of the business with the competent authority (trade office) is necessary.
Qualification requirements
For the self-employed operation of a craft exempt from licensing, no formal proof of qualification such as a master craftsman’s certificate or a completed apprenticeship is required. However, no deceptive statements may be made regarding qualifications to prevent consumer deception (§ 3 Paragraph 1 UWG – Act Against Unfair Competition).
Mandatory membership in the Chamber of Crafts
Despite no entry obligation in the Register of Crafts, there is a mandatory membership in the locally responsible Chamber of Crafts when conducting a craft exempt from licensing under § 90 HwO. This entails rights and obligations, particularly the chamber contributions.
Scope of Activities and Trade Law
Independent and Self-Employed Execution
Crafts exempt from licensing can be operated independently and on one’s own responsibility by the business owner. Legal persons (e.g., GmbH or AG) and partnerships (e.g., OHG, KG) can also appear as owners.
Business Owner and Technical Management
There is no legal obligation to appoint a special technical manager. The business owner can therefore carry out the craft tasks independently or employ workers to perform these tasks.
Handicraft Activities with Overlaps
If a business does not exclusively carry out activities covered by crafts exempt from licensing but also performs tasks that belong to a craft subject to licensing, stricter requirements (e.g., master craftsman obligation) apply to those activities. Therefore, a clear distinction must be made between the business activities of crafts exempt from licensing and those subject to licensing. Mixed businesses may, under certain circumstances, be subject to the entry requirement.
Special Considerations in Legal Transactions
Employment and Training Opportunities
In crafts exempt from licensing, business participants can employ workers independently. However, the vocational training of apprentices as part of dual training is not possible without entry in the Register of Crafts – apprenticeship training is reserved for businesses subject to licensing (§ 27 HwO).
Legal Restrictions and Responsibilities
Anyone who violates craft law regulations, for example by declaring a craft subject to licensing as exempt from licensing without authorization, commits an administrative offense under § 117 HwO and may be fined. Under competition law, further warnings for unfair competition may be issued.
Tax and Social Law Aspects
All tax obligations (income tax, VAT, possibly trade tax) as well as social law obligations regarding the registration of employees with social insurance institutions also apply to businesses carrying out crafts exempt from licensing.
Administrative Procedures
Proof and Documentation Obligations
Although the obligation to enter the Register of Crafts lapses, the general commercial law duties such as proper record-keeping must still be observed.
Changes in the Business Operation
If the field of activity is changed or expanded to a craft subject to licensing, a new application or re-registration is required. This is mandatory if the legal orientation of the business changes.
Relevant Legal Texts and Annexes
The most important legal bases for crafts exempt from licensing are:
- Crafts Code (HwO)
- Industrial Code (GewO)
- List of trades in Annex B of the Crafts Code
Summary
Crafts exempt from licensing make it possible to operate one’s own craft business without a formal master craftsman’s certificate or comparable qualifications. The essential requirement is compliance with the legal regulations according to HwO, GewO, and other relevant provisions. The distinction from crafts subject to licensing and craft-like trades results in specific obligations and rights, particularly with regard to business registration, chamber membership, and scope of activities.
Weblinks
- Crafts Code (HwO)
- Industrial Code (GewO)
- Annex B of the HwO – crafts exempt from licensing and craft-like trades
Frequently Asked Questions
What formal requirements must be met to practice a craft exempt from licensing?
To practice a craft exempt from licensing pursuant to Annex B Section 1 of the Crafts Code (HwO), entry in the Register of Crafts is not required. Instead, the business must be entered in the register of crafts exempt from licensing at the competent Chamber of Crafts pursuant to § 18 HwO. There is no mandatory requirement to demonstrate a special qualification, such as the master craftsman title. Nevertheless, for certain activities there may be a duty to notify additional authorities (business registration in accordance with § 14 GewO) as well as compliance with occupational, commercial, and construction regulations, for example, regarding occupational health and safety, consumer protection, or environmental protection. In addition, any special professional access regulations for certain activities – for example in the area of environmental or occupational safety – must be observed independently from the Crafts Code. Proper registration with the tax office and treatment under social security law as an independent business are also mandatory.
Which activities are legally considered crafts exempt from licensing?
Only those trades listed conclusively in Annex B Section 1 of the Crafts Code are considered crafts exempt from licensing. These include, for example, tilers, slab and mosaic layers, building cleaners, photographers, and other professions that by law are neither classified as crafts subject to licensing under Annex A nor as craft-like trades under Annex B Section 2. What matters is that the activity practiced matches in scope and content the occupational profile stated in the HwO. Distinctions from activities requiring a permit must be strictly observed; otherwise, a violation of the Crafts Code or other applicable legal provisions may occur.
To what extent is there an obligation for further training or proof of professional knowledge?
Unlike crafts subject to licensing, the Crafts Code does not prescribe mandatory further training or formal proof of specific professional qualifications, such as the master craftsman’s certificate, for crafts exempt from licensing. Nonetheless, the entrepreneur remains obliged under general civil and criminal law principles to perform his activities professionally, diligently, and in compliance with relevant technical and legal standards. Especially in cases of damage, lack of expertise can lead to warranty claims or liability. Special laws specific to the industry or activity (e.g., Electrical and Electronic Equipment Act, Hazardous Substances Ordinance) may nonetheless set out qualification or documentation obligations that must also be observed.
What legal consequences threaten if a craft subject to licensing is conducted unlawfully under the guise of a craft exempt from licensing?
Anyone who practices a craft subject to licensing without providing the required entry in the Register of Crafts or without proof of the necessary qualification commits an administrative offense pursuant to § 117 para. 1 no. 1 HwO. This can be punished with a fine of up to 10,000 euros. Furthermore, claims for injunctive relief under competition law may be asserted, for example by competitors or associations, pursuant to § 8 et seq. UWG. In addition, closure of the business operation may be ordered (§ 16 HwO) and, in the event of damage, civil or criminal liability may ensue. Therefore, differentiation between crafts exempt from licensing and those requiring licensing is of great legal importance.
Is entry in the Register of Crafts or other registers required?
In the case of crafts exempt from licensing, entry in the Register of Crafts according to § 7 HwO is not required. However, according to § 18 HwO, entry in the register of crafts exempt from licensing at the competent Chamber of Crafts is necessary. Notification to the trade office is also required and is independent of the registration with the Chamber of Crafts, mainly regulating the supervision of uniform administrative activity at the municipal level. No further professional register obligations apply to crafts exempt from licensing, unless sector- or activity-specific special regulations (for example from environmental law) require additional registration or notification.
Are there specific obligations or restrictions for businesses practicing crafts exempt from licensing compared to those subject to licensing?
Businesses practicing crafts exempt from licensing are generally subject to the same commercial, tax, and employment law obligations as those subject to licensing, such as accounting, tax registration, or social security. However, compared to crafts subject to licensing, entry requirements such as the master requirement do not apply, which makes access easier. There are no privileges regarding product liability, working time laws, or other general legal requirements. If third parties such as customers, insurers, or suppliers require special proof of expertise or further training, such obligations may indirectly create access barriers. Furthermore, compliance with consumer protection and information obligations, particularly in contracts with private customers, must be ensured.
What legal consequences can result from incorrect registration or false declaration of the craft activity?
Incorrect registration or misdeclaration of the actual craft activity with the trade office or Chamber of Crafts can have extensive legal consequences. These include the possibility of subsequent prohibition of business operations, administrative fine proceedings, claims for damages from third parties, as well as potential back payments of contributions to professional chambers and social insurance. In addition, tax consequences and a change in the assessment under commercial law (including reliability) may arise. Especially in the case of intentional false statements, prosecution under § 263 StGB (fraud) or § 156 StGB (false sworn affidavit) is possible.
Are businesses practicing crafts exempt from licensing required to have professional liability insurance?
Crafts law does not provide any general obligation for businesses practicing crafts exempt from licensing to take out professional liability insurance. Whether and to what extent such insurance is required is determined by other regulations, for example, building code law, the Product Liability Act, or sector-specific requirements. Nevertheless, it is highly advisable to take out appropriate insurance for risk protection, since craftspeople exempt from licensing are fully liable for any damages caused – regardless of any statutory insurance requirement.
