Federal Office for Economic Affairs and Export Control (BAFA) extends validity period and cancels EU-wide validity of General Authorisation No 42 for services and business software for Russian subsidiaries

On 17 July 2024, Germany’s Federal Office for Economic Affairs and Export Control (Bundesamt für Wirtschaft und Ausfuhrkontrolle – “BAFA”) reissued General Authorisation No 42 (“GA 42”) with effect from 18 July 2024. This postponed the start date of GA 42 for services and software until 1 October 2024. In addition, GA 42 can now be used for a significantly longer period, until 31 December 2025.

The GA 42 has proven to be very important for German companies, as it allows them to continue to provide intercompany services for their subsidiaries using the GA (see our report here).

The background to the adjustment is the 14th EU sanctions package against Russia dated 24 June 2024 (see our report here). As part of this amendment, the temporal scope of the ban on services under Article 5n Regulation (EU) No 833/2014 was extended. It was therefore necessary to revise the German General Authorisation No 42 for the provision of business software and services to non-sensitive recipients in Russia to align it with the temporal scope of the EU sanctions regulations.

The provision of technical assistance, brokering services or other services is already authorised insofar as it is prohibited under Article 5n(3a)(a) of Regulation (EU) No 833/2014; see No 4.6 of GA 42. That an authorisation is required in this context follows from the fact that the corresponding prohibition is already enforced by Regulation (EU) No 833/2014: the exemption provision in Article 5n(7) of Regulation (EU) No 833/2014 does not cover subsection 3a. Given the recent 14th sanctions package, which also amended Article 5n(7) of Regulation (EU) No 833/2014, it can no longer be argued that a drafting error is to blame, as BAFA suspected when issuing the original GA 42, which authorised Article 5n(3a)(a) of Regulation (EU) No 833/2014.

BAFA has stated that the content of the revised GA 42 remains substantively unchanged apart from the adjustment of the temporal scope. However, from a Brussels perspective, this assessment might differ. The original GA 42 stated that it was valid in all Member States of the European Union. This statement has now been removed. This change appears to be due to the divergent view of the European Commission, which rejects the possibility of national general authorisations with EU-wide validity in the context of Russia sanctions. Following the announcement of the original GA 42, the European Commission updated its FAQs on Russia sanctions in April 2024. The Commission argues that Regulation (EU) No 833/2014 does not provide for general authorisations, as these would constitute a de facto exemption, and that national authorisations are only valid within that specific EU Member State.

It is noteworthy and of greater practical relevance to EU companies that the period of validity has been significantly extended. The original version of GA 42 was valid until the end of March 2025. The revised version, by contrast, is valid until the end of 2025.

Registrations or notifications of services previously made to BAFA under the formerly applicable version of GA 42 remain valid, meaning that companies will be spared renewed effort. It is also welcome that the extended period of validity of GA 42 until the end of 2025 provides planning security for German companies – albeit subject to the inevitable adjustments to the EU sanctions regime against Russia.