Germany has issued a new law targeting nail salons to combat tax evasion, illegal labor, and money laundering. Employees must carry valid ID, owners must report workers immediately, and fines can reach up to 5,000 euros.

The German government is implementing a series of strong reforms to address illegal labor, tax evasion, and sophisticated criminal activity within the beauty services sector.

A new bill submitted by Finance Minister Lars Klingbeil will tighten regulations for nail salons — an industry increasingly considered a “hotspot” for multiple violations.

This is not a standalone regulation but part of a broader strategy to modernize law enforcement, improve data sharing among authorities, and increase state revenue.

1. Core Requirements: A “Dual Obligation” for Employees and Owners

The new bill, officially called the Modernization and Digitization of Enforcement Against Illegal Employment Act, introduces two key mandatory obligations:

For Employees: Must carry a valid identification document (passport, ID card, residence permit) at all times while working.

For Business Owners: Must fulfill a “same-day reporting obligation.” This means the employer must notify the German Pension Insurance (Deutsche Rentenversicherung) of any new employee no later than the worker’s first day on the job.

2. Strict Penalties Up to 5,000 Euros

To ensure deterrence, the law introduces clear financial penalties. Any employee who cannot present valid identification during an inspection, or refuses to do so, may face an administrative fine of up to 5,000 euros.
Business owners will also face equivalent penalties if they fail to comply with the obligation to register new employees immediately.

3. Why Is Germany Targeting Nail Salons?

Authorities have strong reasons to focus on this industry. According to government sources, nail salons are increasingly associated with serious violations:

• Illegal labor and tax evasion: The most common issue, causing major losses to social welfare funds.

• Wage violations & exploitation: Many salons have been found paying below minimum wage or engaging in exploitative practices.

• Money laundering & organized crime: Some salons are suspected of involvement in money-laundering schemes and criminal networks (clan-related crime).

Mandatory ID rules already exist in other high-risk industries such as construction and hospitality.

4. Enforcement Strategy: Digital Tools & Stronger Oversight

To effectively enforce the new law, the specialized customs unit, Finanzkontrolle Schwarzarbeit (FKS – the Financial Control of Undeclared Work), will be granted additional powers and modern tools:

Direct data access: Customs inspectors will be given direct access to the national police information network. This allows them to verify a worker’s identity immediately without needing police assistance as before.

Independent investigations: FKS will have the authority to conduct fraud investigations on its own, helping to reduce the burden on judicial agencies.

Digital monitoring & targeted inspections: The increased use of digital tools will make inspections more efficient, enabling authorities to focus on businesses showing signs of violations while reducing the number of checks for companies that comply with the law.

5. What Salon Owners Should Do Now: Turn Compliance into Opportunity

Instead of worrying about penalties, salon owners should view these changes as an opportunity to professionalize their operations.

Step 1: Conduct a Legal Self-Audit

Review all employee records, contracts, and insurance registrations.
Ensure 100% compliance with documentation and reporting requirements.

Step 2: Invest Confidently in Marketing

A fully legal and transparent business reduces the risk of surprise inspections or heavy fines.
This is the perfect moment to invest in branding and communication.

Step 3: Build Customer Trust Through Transparency

A salon that operates openly and legally will gain strong credibility with customers in Germany.
Compliance becomes a competitive advantage, signaling professionalism and long-term reliability.

By staying compliant, you reduce risk — but more importantly, you build a solid foundation for business growth.

6. Conclusion: Compliance for Stability – Marketing for Breakthrough Growth

The tightening of legal regulations in Germany is not a barrier, but an opportunity to filter the market and build credibility. For serious nail salon owners, complying with the law is a fundamental requirement for sustainable business.

But compliance alone is not enough to break through. Once the legal aspects are taken care of, salon owners need a clear strategy to turn that transparency into a powerful competitive advantage.

👉 This is where SPS Marketing comes in. In a context where the entire industry is under scrutiny, building a professional website, establishing a clear brand identity, and running transparent advertising campaigns send a strong message:
“We are a serious and lawful business, and a safe, high-quality choice for customers in Germany.”

SPS Marketing helps Nail/Spa businesses achieve all of this — from website development and social media management to advertising campaigns and online customer experience optimization. Combined with high-quality in-store services, your salon will increase revenue, strengthen its brand, and build long-term customer loyalty.