Only nazi themed and swastikas aren't allowed. Adult themed games on the other hand are allowed in Germany. The problem lays in the age verification system that Valve implemented. The German government believes that Valve has not applied a proper age verification system.
In other words, adult themed content can be released on Steam if Valve implement a stricter age verification system.
This is a topic you see recently a lot in the news. Not only in Germany but also in other countries. For example Pornhub in some states in North America.
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Companies need to figure this out, which cost a lot of time and resources. So, most of them just block access, which is the easiest way. And it could be that USK won't review any adult themed games, due the fact that many platforms don't have a proper age verification system.
It's not illegal to own or play adult games in Germany. Only the platforms that offers it, need to have stricter age verification systems. It goes even further than that, minors are even allowed to play 18+ content, like violence, gore and even adult stuff. But stores and platforms aren't allowed to sell it to them. But if one of the parents buy it for them and let them play it, then it's allowed. Same with smoking and alcohol. It's the parents responsibility.
I also worked in a hardware shop where we sold games. A 12 year old walked in and wanted to buy Call of Duty. I said "No, i'm not allowed to sell it to you." He replied "My dad said that I can buy it." First thing I said "Well, then you need to come back with your dad." Like 20 minutes later he walked in with his dad. Now I could sell the game, but I needed to give it to his dad and not directly to him (we had video camera's). Once it was in his dad hands, the 12 year old was allowed to receive it from his dad. I also wasn't allowed to receive the money from the child, only directly from his dad.
That's how it works, I wasn't allowed to sell it nor give it to the 12 year old child, only his dad. That's how the law works in Europe. Same goes with alcohol, you aren't allowed to sell it to minors, but if one of the parents buy it for them, it's allowed and you need to give it to the parents.
And funny thing is, it wasn't even necessary to check if they are really the parents. Aslong it was a adult, it was fine. But since many websites and platforms don't have a proper age verification system, they aren't allowed to offer adult content. Steam asks for your age, but you can just fill in any age you want. They don't really check if it is correct or not. Compare this to me when I was working in a hardware store and was selling Call of Duty or even GTA with semi-nude and sex themed content. I was the verification system and needed to ask people's ID cards. If I didn't followed the rules, I could receive a very big fine and my company aswell.
Do you see the difference?