Political parties constitute associations of citizens; as such, they use their own money (contributions and donations) to cover their costs. They contribute, at great expense, to the functioning of the political system by performing the tasks assigned to them under the Basic Law and the Political Parties Act.

The provisions governing the funding of political parties reflect these aspects. The Federal Constitutional Court (BVerfG) holds the view that the state, while not being under an obligation to grant funds to political parties, is not hindered to do so, either.

The Political Parties Act therefore contains provisions governing the parties’ own funds as well as public funds. Furthermore, it stipulates how the political parties have to state their accounts – a requirement which the Basic Law imposes on them.

Partial public funding instead of compensation for election campaign expenses

Following a landmark decision by the Federal Constitutional Court in 1992, the previous system of compensation for election campaign expenses was replaced by permanent partial public funding of political parties. The details are laid down in Part IV of the Political Parties Act (Sections 18 et seqq.).

Allocation of public funds to political parties is based on their “rootedness in society“, i.e. on their success in elections to the European Parliament, to the Bundestag and to Landtage (federal states' parliaments), and on the amount of cash contributions received (membership dues and contributions paid by elected representatives/officials, and donations). This means that political parties will always have to seek the support of the public.

Eligible for public funding are political parties which, according to the final result of the most recent elections to the European Parliament or to the Bundestag, polled at least 0.5 per cent or, in an election to a Landtag, won 1 per cent of the valid votes cast for party lists (Section 18 (4), first sentence, of the Political Parties Act).

Amount of public funding

Political parties will generally receive the following amounts per year::

• 0.83 euro for each valid vote cast for the respective party list or, if a list for that party was not admitted at the Land level, each valid vote cast for a party in a constituency or polling district.
• 0.45 euro for each euro received from other sources (membership dues, contributions from elected office-holders, or lawfully obtained donations); only donated amounts of up to 3,300 euros per natural person will be taken into account.

In order to compensate for the advantage enjoyed by parties that are already established and represented in a parliament over newly established smaller parties, a party will receive 1.00 euro (instead of 0.83 euro) for the first four million votes won by that party (Section 18 (3) of the Political Parties Act).

However, the amount of public funding must not exceed the income generated from the party’s own sources (relative upper limit, Section 18 (5), first sentence, of the Political Parties Act). Thus, parties must provide for at least half of their finances.

There is a fixed upper limit for the overall amount of public funds to be allotted to all eligible parties (Section 18 (5), second sentence, of the Political Parties Act). In 2012, it stood at 150.8 million euros. It is regularly adjusted to general price trends.

If the amount of public funds calculated exceeds the absolute upper limit, each party’s amount must be reduced proportionally (Section 19a (5) of the Political Parties Act). This happens regularly. Thus, in practice parties do not receive the above amounts per vote and euro received, but amounts that have been reduced as just described.

Accountability of political parties

The Basic Law requires political parties to publicly account for their assets and for the sources and use of their funds (Article 21 (1), fourth sentence, of the Basic Law). The details are laid down in the Political Parties Act (Sections 23 et seqq.), which stipulates that the annual statements of accounts to be submitted to the President of the German Bundestag must first be reviewed by a certified auditor or auditing firm. The statements of accounts must contain the following information:

• Revenues
• Expenditures
• Assets
• Debts

The President of the German Bundestag publishes the statement of accounts as a Bundestag printed paper (Section 23 (1) and (2) of the Political Parties Act).

He also checks the statement to verify its due form and accuracy and its compliance with the requirements contained in Part V of the Political Parties Act. If there is concrete evidence suggesting that the statement of accounts contains inaccurate information, he must clarify the facts (Section 23 (3), first sentence, and Section 23a of the Political Parties Act). Inaccuracies may lead to penalties under the Political Parties Act or to consequences under criminal law (Sections 31a et seqq. of the Political Parties Act).

Transparency with regard to major donations

The obligation of political parties to submit their statement of accounts is intended to make the process of political opinion formation transparent by showing voters which groups, associations or individuals, if any, seek to influence the political parties through their donations. The aim is to inform voters fully and accurately about relevant donations to political parties, enabling them to draw their own conclusions.

Section 25 (2) no. 6 of the Political Parties Act requires the political parties to identify donors paying sums exceeding 500 euros. The statements of accounts must list donations and contributions paid by elected representatives/officials to an amount exceeding 10,000 euros per calendar year, stating the donor’s name and address and the total amount of the donation received.

Single donations in excess of 50,000 euros must be reported immediately to the President of the German Bundestag, who then publishes the donation, stating the donor’s name, on the Internet and in a Bundestag printed paper as soon as possible (Section 25 (3) of the Political Parties Act).