Since politicians approved the relaxation of the debt brake and the creation of a special fund for infrastructure and armaments in March 2025, the armaments sector has been booming. Defence spending is at a record high. By 2029, the German defence budget alone is expected to rise to €158.8 billion. However, there is a lack of production capacity in the defence sector to meet demand. At the same time, industries such as the automotive supply industry are struggling with economic challenges. Quite a few companies that manufacture civilian products are therefore considering switching their production to defence equipment and, in particular, weapons of war.
What used to be taboo is now increasingly being considered a real option in some industries. But the move from civilian products to weapons of war is not only politically and morally sensitive – it is also legally complex, as special licensing requirements apply to the production of so-called weapons of war.
What exactly are weapons of war?
According to the Weapons of War Control Act (KrWaffKontrG), weapons of war are intended for use in armed conflicts. These include tanks, missiles, fighter jets, assault rifles and submarines. A list of weapons of war can be found in Part B of the Annex to the KrWaffKontrG. The possession, production and trade of weapons of war are subject to the strictest state controls, as their use is directly related to the state's monopoly on the use of force and international security.
Licensing requirements under the War Weapons Control Act:
The KrWaffKontrG stipulates far-reaching licensing requirements. In particular, the manufacture, but also the placing on the market, transport within the federal territory and the import and export of weapons of war are subject to authorisation.
To obtain authorisation, a written application must be submitted to the Federal Ministry for Economic Affairs and Energy (BMWE) or an application in digital form via the Elster portal. The application must contain detailed information about the product, the manufacturer, the planned use and safety measures. The BMWE reviews the application in close consultation with the Federal Foreign Office and other authorities. Foreign and security policy aspects, e.g. the security situation in the recipient country, are also taken into account. Approval is only granted if all requirements are met and there are no political concerns. Even attempting to manufacture or supply weapons of war without a licence may be punishable by law and, under the KrWaffKontrG and the Criminal Code (StGB), may be punished with imprisonment of up to ten years
This means that even the intended conversion of civilian production capacities to armaments requires a licence if weapons of war are to be produced in the future.
Special requirements for classified information
Anyone who works with security-relevant armaments can hardly avoid classified information (VS). Companies that receive so-called classified information orders from the German Armed Forces are therefore included in the BMWE's security protection programme. Classified information is subject to special protection against unauthorised access. Companies that require access to classified information must provide evidence of VS approval and implement extensive security measures – from structural protective measures to security checks on employees
Supplying the German Armed Forces
When supplying the German Armed Forces, additional regulations such as DEMAR 21 (Defence Materiel Regulations) for aircraft must be observed. Among other things, DEMAR 21 regulates the requirements for suppliers, the terms of the contract, technical documentation and documentation requirements in the defence sector. Contracts with the Federal Office for Equipment, Information Technology and Use of the German Armed Forces (BAAINBw) also stipulate far-reaching obligations such as chains of custody, compliance audits and offset agreements
Conclusion
Entering the defence industry is no ordinary change of sector. The legal requirements are high. Anyone wishing to take this step must not only have technological and industrial expertise, but also be able to navigate a highly regulated environment involving approvals, secrecy and military bureaucracy. Thorough legal and strategic preparation is a prerequisite for a successful transition. Our experts will be happy to support you every step of the way.
