Forecast decisions by the authorities in the case of hire car companies constitute an encroachment on the freedom to choose an occupation under Article 12 of the Basic Law. It is therefore not sufficient for the authorities to cite mere doubts or suspicions.
Before issuing a licence for hire car companies (for which UBER, Bolt or Bliq, for example, provide the platform), the competent authorities must make a forecast of how reliable the entrepreneur is. In order to be able to assess this, the authorities require, among other things, overviews of the company’s financial performance or start-up calculations. So far, so good. This is because checking the financial capacity and reliability of the entrepreneur is a legal requirement:
Authorisation may only be granted if
- the safety and efficiency of the operation are guaranteed,
- there are no facts that demonstrate the unreliability of the applicant as an entrepreneur or of the persons appointed to manage the business,
However, conflicts with the fundamental right to freedom of occupation arise if the authority comes to the conclusion on the basis of financial overviews and forecast income and expenditure that the company – in the opinion of the authority – will probably not generate enough income and therefore does not have the necessary reliability. In many cases, the authorities go even further with their look into the crystal ball. It is not uncommon for the authorities to assume that
“it cannot be ruled out that the company will violate labour and social law regulations or fail to properly fulfil its tax obligations in the future due to a lack of financial capacity”,
or
“There are also doubts as to whether the labour or social law obligations, in particular the regulations on driving times and rest periods for drivers, can be complied with”.
But how is such a prognosis decision actually compatible with the fundamental right to freedom of occupation under Article 12 (1) of the German Constitution?
The fundamental right to freedom of occupation under Article 12(1) of the Basic Law protects both the free choice of occupation and the exercise of the occupation. A decision refusing authorisation has the same de facto effect as an occupational ban. In principle, such interventions may only be made if they are necessary to protect overriding public interests. In concrete terms, this means that the authority must set particularly high standards for the reasons and justification of the decision.
In its ruling of 30 April 2008(case no. 13 A 8/07), the Münster Higher Administrative Court clarified that prognosis decisions that interfere with the fundamental right to freedom of occupation are only permissible if they are based on well-founded facts and not merely on mere doubts or assumptions.
“According to these criteria and taking into account the meaning and purpose as well as the objective of the relevant provisions, the prognostic assessment that the plaintiff is unreliable as an entrepreneur within the meaning of Section 13 (1) sentence 1 PBefG is not justified in the opinion of the Senate. This applies in particular against the background that the refusal of a licence (in this case for the operation of a taxi), like a professional ban, deeply interferes with the right of free choice of profession and at the same time with private and family existence and such restrictions are only permissible under constitutional law if and as long as they are necessary to protect particularly important common goods.”
Case law therefore demands a strict standard when examining reliability.
Such a strict standard is not just a mere development of the law, but also follows from the wording of Section 1 (1) sentence 2 no. 2 d) PBZugV:
“Indications of the unreliability of the entrepreneur or the person appointed to manage the business are, in particular, serious breaches of obligations under tax law arising from entrepreneurial activity”.
Accordingly, it must be established that serious offences against tax obligations have been committed. A mere suspicion or general doubts are not sufficient. This is also the view of the Stuttgart Administrative Court in its judgement of 27 February 2019(Ref. 8 K 10743/18):
“Since the refusal of a licence, like a ban on a profession, deeply interferes with the right to freely choose a profession and at the same time with private and family existence and such restrictions are only permissible under constitutional law if and as long as they are necessary to protect particularly important common goods.”
The refusal of licences to operate a hire car business for passenger transport as part of official forecasting decisions on the grounds that tax regulations are likely to be violated or because a forecast profit is not sufficient to ensure financial viability is unlawful and incompatible with the right to freedom of occupation under Article 12 of the German Constitution.