Fremdverträge

Fremdverträge (German for “contracts with third parties”) are legal agreements in which a party delegates the performance of certain obligations to an external contractor rather than executing them itself. The concept appears in various areas of German law, notably in public procurement, tax regulations, and corporate governance, where it serves to delineate responsibility, risk allocation, and compliance requirements.

In the context of public procurement, Fremdverträge are used when a contracting authority awards a portion of a project to a subcontractor. German procurement law (Vergaberecht) demands transparency and equal treatment of bidders, and the primary contract must contain clauses that ensure the subcontractor’s performance meets the same standards as those required of the main contractor. Failure to observe these provisions can result in the invalidation of the contract or sanctions for the parties involved.

Tax law also addresses Fremdverträge, particularly in relation to value‑added tax (VAT) and corporate income tax. When a company outsources services to an unrelated entity, the transaction is subject to the usual tax treatment, and the contracting party must retain appropriate documentation to substantiate the expense and to avoid accusations of tax evasion or abusive contract structures.

Corporate law references Fremdverträge when assessing fiduciary duties of directors. Executives must ensure that outsourcing decisions serve the best interest of the company, are justified by economic efficiency, and do not compromise statutory obligations such as employee protection or capital maintenance.