Accused of Breach of Trust in Germany? Section 266 StGB

The German offence known as Untreue under Section 266 StGB is frequently described in English as breach of trust. The English translation of the German Criminal Code published on the German government’s legal information website uses the heading “Embezzlement”.

Neither English term should automatically be equated with offences carrying the same name in the United States, England or other legal systems. Criminal liability in Germany depends exclusively on the specific requirements of Section 266 StGB.

Proceedings frequently concern managing directors, board members, employees with financial authority, trustees, attorneys, association officers, authorised representatives or other people entrusted with third-party assets.

Allegations may arise following a criminal complaint, an internal company investigation, an audit, a police summons or a search of business premises or a private residence.

If you are accused of breach of trust or embezzlement in Germany, do not make a statement before the investigation file has been reviewed. Complex financial transactions and internal responsibilities cannot usually be assessed reliably without knowing the evidence collected by the prosecution.

Is breach of trust a criminal offence in Germany?

Yes. Breach of trust is a criminal offence under Section 266 of the German Criminal Code, known as the Strafgesetzbuch or StGB.

The offence protects assets against financial harm caused by a person who was entrusted with particular responsibility for those assets.

Criminal liability generally requires four central elements:

1. The accused had a special duty to safeguard or manage another person’s assets.
2. The accused misused a legal authority or breached that duty.
3. The conduct caused an economic disadvantage to the protected assets.
4. The accused acted intentionally.

A poor business decision, breach of contract or internal procedural error does not automatically constitute a criminal offence. Each statutory element must be established separately.

The English translation of the relevant provisions can be found in the German Criminal Code.

What is breach of trust under Section 266 StGB?

Section 266 StGB contains two forms of the offence:

• misuse of a legal authority and
• breach of a duty to safeguard another person’s financial interests.

Both forms require a special asset management duty, referred to in German as a Vermögensbetreuungspflicht. Both also require a financial disadvantage.

Misuse of legal authority

The first form concerns a person who is legally authorised to dispose of another person’s assets or to enter into obligations on their behalf but exceeds the limits applying internally to that authority.

A transaction may therefore be legally effective towards an external contracting party even though it was prohibited by internal instructions, a company agreement or a required approval process.

Possible examples include:

• a managing director concluding a transaction outside their internal authority,
• an authorised representative transferring assets contrary to binding instructions or
• a person with account authority making payments that were not permitted internally.

Exceeding an internal authority is not sufficient by itself. The prosecution must also prove the required asset management duty, an economic disadvantage and intent.

Breach of an asset management duty

The second form does not necessarily require formal authority to conclude legally binding transactions. It concerns the violation of a particular duty to safeguard another person’s financial interests.

The duty may arise from legislation, an official appointment, a contract, a power of attorney or another relationship of trust.

A breach can be committed by active conduct or by failing to act where the accused had a specific obligation to protect the assets.

A general contractual obligation to act carefully is not enough. The person must have had a particularly important and independent role in protecting or managing the assets.

What is an asset management duty?

The asset management duty is the central requirement of Section 266 StGB. Not everyone who handles another person’s money or property automatically has such a duty.

The person must generally have

• significant responsibility for third-party assets,
• a degree of independence,
• decision-making authority and
• more than merely subordinate or mechanical tasks.

An asset management duty may particularly apply to:

• managing directors and members of executive boards,
• authorised signatories and senior employees with financial authority,
• trustees and asset managers,
• attorneys or tax advisers managing client funds,
• court-appointed guardians and estate administrators,
• association board members and treasurers and
• persons acting under a comprehensive power of attorney.

Accountants, cashiers, controllers and other employees may have such a duty only if their actual position gives them sufficient independent responsibility for the assets. Their job title alone is not decisive.

When is an asset management duty breached?

The relevant duties are often not found directly in the Criminal Code. They may result from company law, employment agreements, articles of association, internal rules, powers of attorney, board resolutions or specific instructions.

The defence must therefore determine:

• Who was authorised to make the financial decision?
• Which internal approval requirements applied?
• Was a four-eyes principle required?
• Were deviations from the formal procedure routinely accepted?
• Did a competent person or corporate body approve the transaction?
• What information was available when the decision was made?
• Did the accused have discretion to make an independent decision?

The assessment must be based on the circumstances at the time of the decision. A later financial loss does not prove that the original decision was criminal.

Valid consent and subsequent approval

Valid consent from the person or corporate body authorised to make the decision may exclude a breach of duty.

However, consent is not automatically effective in every case. It must be given by the competent person or body and remain within mandatory legal restrictions.

This can be particularly important in companies where the interests of the company cannot always be waived by an individual shareholder, managing director or board member.

Business decisions and commercial risk

Business decisions frequently involve uncertainty and the possibility of loss. A commercially unsuccessful investment, loan or contract is not automatically a criminal breach of trust.

Relevant questions include whether the decision was sufficiently informed, whether applicable approval requirements were followed and whether the accused acted within the scope of their authority.

The prosecution cannot assess a business decision solely with the benefit of hindsight.

When does a financial disadvantage occur?

A breach of duty is punishable under Section 266 StGB only if it causes a financial disadvantage.

The economic value of the protected assets before and after the disputed transaction must generally be compared. Any consideration received, enforceable claims, securities and other financial advantages must be included.

A financial disadvantage may arise where

• money is paid without receiving equivalent value,
• an asset is sold substantially below its value,
• a commercially worthless claim is acquired,
• a valuable claim is waived without justification or
• funds are removed from the effective control of the person entitled to them.

Not every accounting irregularity or temporary movement of funds constitutes a financial disadvantage. The prosecution must identify an independent and economically measurable loss.

Concrete risk to assets

In certain circumstances, a sufficiently concrete risk of loss may already reduce the present economic value of the assets.

A merely abstract, remote or theoretical risk is not enough. The risk must be sufficiently specific and capable of being assessed economically.

In complex proceedings, the calculation of the alleged financial disadvantage is often one of the main areas of defence. Expert financial or accounting analysis may be required to assess payments, securities, claims, counterclaims and contractual benefits.

Is negligence sufficient for breach of trust?

No. Section 266 StGB requires intent. Negligent breach of trust is not punishable under this provision.

The accused must at least have recognised and accepted the possibility that

• they were breaching an asset management duty and
• their conduct would cause a financial disadvantage.

Intent may be disputed where

• internal responsibilities were unclear,
• the accused believed that valid approval had been granted,
• the accused relied on information provided by employees or professional advisers,
• valuable consideration or repayment was expected or
• the later financial development was not foreseeable.

Personal enrichment is not required. A person may therefore be accused of breach of trust even if they did not receive the money or financial advantage themselves.

Is attempted breach of trust punishable?

No. Attempted breach of trust under Section 266 StGB is not punishable.

A completed offence requires an actual financial disadvantage. This distinction is particularly important where the prosecution relies only on an uncompleted transaction or a risk that never became economically relevant.

Typical breach of trust allegations in Germany

Misuse of company funds

Allegations involving company funds frequently concern managing directors, board members or employees with access to business accounts and payment systems.

Typical accusations include:

• private payments from a company account,
• payments to related persons or companies,
• unauthorised withdrawals,
• fictitious invoices,
• payments for services that were allegedly not provided or
• expenses that allegedly had no business purpose.

The defence must examine the person’s authority, internal agreements, shareholder or board resolutions and whether the company received economic value in return.

Allegations against managing directors and board members

Managing directors and board members frequently have extensive responsibility for company assets. This can result in investigations following risky investments, transactions with related parties, unsecured loans, unusual remuneration or payments made without formal approval.

The existence of corporate responsibility does not mean that every breach of company law is automatically a criminal offence. The alleged breach must be sufficiently serious and must have caused an economic disadvantage.

These cases form an important part of German white-collar criminal law.

Misuse of entrusted funds

Trustees, attorneys, authorised representatives, guardians and other people managing entrusted funds may face allegations if money is transferred to personal accounts or used for purposes not covered by the relevant agreement.

The investigation must establish the scope of the authority, the agreed purpose of the funds and whether the person entitled to the money suffered an economic disadvantage.

Association and charity funds

Board members, treasurers and other association officers may have an asset management duty towards the association.

Proceedings may concern undocumented cash withdrawals, private expenses, donations used for a different purpose or payments made without the approval required by the articles of association.

The articles of association, resolutions, actual allocation of responsibilities and previous internal practice must be reviewed carefully.

Public funds and breach of trust in public office

Public officials and employees responsible for public budgets may be investigated where funds were allegedly used contrary to budgetary requirements.

A breach of administrative or budgetary rules does not by itself establish criminal liability. A specific asset management duty, a sufficiently serious breach and a measurable financial disadvantage are still required.

Slush funds

Slush funds involve assets that are removed from regular accounting or from the effective control of the person or company entitled to them.

The establishment or maintenance of such a fund may lead to an allegation under Section 266 StGB. However, the prosecution must still demonstrate precisely how the conduct caused an economic disadvantage.

The mere existence of inaccurate accounts is not a substitute for establishing financial loss.

Kickback payments and undisclosed commissions

A kickback arrangement may involve a person receiving an undisclosed payment from a contracting party in connection with a decision they made for an employer or company.

This may suggest that the decision was influenced by personal interests. Nevertheless, the prosecution must establish the particular duty that was breached and the financial disadvantage caused to the protected assets.

Depending on the circumstances, corruption offences may also be investigated.

Risky investments and loans

An investment, loan or restructuring measure that later results in a loss does not automatically constitute breach of trust.

The assessment must consider the information available at the time, the expected benefits, existing securities, decision-making authority and the commercial purpose of the transaction.

A criminal allegation requires more than the fact that a business risk ultimately materialised.

Use of rental deposits

German law generally requires residential rental deposits to be held separately from the landlord’s own assets.

A breach of that obligation does not automatically constitute completed breach of trust. The prosecution must also establish intent and a financial disadvantage.

This may become relevant where the deposit has been spent and the tenant’s repayment claim is no longer economically secure. Commercial leases must be assessed primarily according to the contractual arrangements.

What is the penalty for breach of trust in Germany?

The basic offence under Section 266 StGB is punishable by

• a fine or
• imprisonment for up to five years.

The sentence in an individual case may depend on:

• the amount of the financial disadvantage,
• the duration and intensity of the breach,
• the position and responsibility of the accused,
• whether the accused personally benefited,
• the number of alleged transactions,
• previous convictions,
• restitution or compensation and
• the overall evidence and defence strategy.

Depending on the evidence and the seriousness of the allegation, possible outcomes may include discontinuation of the proceedings, a penalty order imposing a fine, an acquittal or a conviction following a trial.

Particularly serious cases under Section 266 StGB

Section 266 (2) StGB refers to the statutory examples for particularly serious fraud cases. If a particularly serious case is established, the sentencing range is imprisonment from six months to ten years.

A particularly serious case may be considered where the accused

• acted on a commercial basis,
• caused a financial loss on a large scale,
• placed a large number of people at risk of losing assets or
• abused their authority or position as a public official.

German case law generally uses 50,000 euros as the threshold for a financial loss on a large scale.

Exceeding that amount does not automatically determine the final sentence. The court must still assess all circumstances of the offence and the accused. The defence must also examine whether the alleged loss was calculated correctly and whether the requirements of the statutory example are actually met.

When does breach of trust become time-barred?

The standard limitation period for prosecution under Section 266 StGB is generally five years.

The period normally begins when the offence is completed. Where the financial disadvantage occurs only later, that later date may be relevant.

The limitation period may be interrupted by specific investigative or procedural measures and may then begin again. It may also be suspended in certain circumstances.

The particularly serious nature of a case does not automatically extend the standard limitation period. A reliable calculation requires examination of the alleged transactions and the procedural history.

What should you do if accused of breach of trust?

Do not make a statement to the police

As a suspect in German criminal proceedings, you have the right to remain silent.

You do not have to prove your innocence during a police interview. A detailed explanation given without knowledge of the investigation file may create contradictions or unintentionally support the prosecution’s case.

Further information is available in our guide to a summons as a suspect in Germany.

Do not attend a police interview unprepared

A suspect is generally not required to attend an ordinary summons issued solely by the police. Different rules apply where the summons was issued by the public prosecutor’s office or a court.

A criminal defence lawyer can notify the police that no statement will initially be made and request access to the investigation file.

Preserve relevant documents

Contracts, powers of attorney, board resolutions, internal policies, emails, invoices, account statements and accounting records may be essential to the defence.

Relevant documents and data should be preserved but not altered, completed retrospectively or deleted.

Possible witnesses or other suspects should not be encouraged to coordinate their accounts of events.

Be careful during an internal investigation

Breach of trust allegations frequently begin with an internal investigation by a company, association or other organisation.

Lawyers engaged by the organisation generally represent the organisation and not necessarily the individual employee, managing director or board member being questioned.

Before participating in an internal interview, the person concerned should clarify their position, possible employment obligations and whether they require independent legal advice.

React immediately to a search

Searches of business premises and private residences are common in white-collar criminal proceedings.

Do not obstruct the search but do not provide voluntary explanations about documents, transactions or accounting records. Contact a criminal defence lawyer immediately.

Further guidance is available in our article on searches in German criminal proceedings.

How can a German criminal defence lawyer help?

The first step is usually to request and analyse the investigation file. Only then can the exact allegation, evidence and calculation of the alleged financial disadvantage be assessed.

The defence should examine in particular:

• Did the accused have an asset management duty?
• What authority and responsibilities did the accused actually have?
• Was valid consent or approval given?
• Was any duty breached sufficiently seriously?
• Did an independently measurable financial disadvantage occur?
• Were consideration, securities and financial benefits properly included?
• Can intent be proven?
• Is the alleged financial loss calculated correctly?
• Does a particularly serious case actually apply?
• Can the proceedings be discontinued?

Complex cases may require the reconstruction of payment flows, corporate responsibilities, contracts and accounting records. Where appropriate, the defence may coordinate with tax advisers, auditors or other specialists.

After reviewing the file, a decision can be made on whether to remain silent or submit a carefully prepared written defence statement.

Further information is available on our pages concerning investigation proceedings in Germany and criminal defence throughout Germany.

Contact a criminal defence lawyer for breach of trust in Germany

Have you received a police summons, an indictment or notice of an internal investigation concerning breach of trust, abuse of trust or alleged embezzlement of company funds?

Our criminal defence lawyers review the alleged asset management duty, the claimed breach, the calculation of the financial disadvantage and the evidence of intent.

We request access to the investigation file, take over communication with the authorities and develop a defence strategy tailored to the economic, professional and personal consequences of the case.

We represent managing directors, board members, business owners, employees, trustees and other accused persons throughout Germany. Consultations can take place in Göttingen or remotely by telephone or video conference.