As associations of citizens, political parties fund their activities through membership dues, contributions and donations. However, they play an important role in the functioning of the political system, at great expense to themselves, by performing the tasks assigned to them by the Basic Law and the Political Parties Act.

The provisions governing the funding of political parties reflect these considerations. The Federal Constitutional Court has ruled that, although the state is not obligated to provide funding for political parties, it is not prohibited from doing so either.

The Political Parties Act (Parteiengesetz) therefore governs both partial public funding for political parties and the parties’ own self-financing. The Act also stipulates how the political parties must make their accounts public, as required by the Basic Law.

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 for political parties. The details are set out in Part IV of the Political Parties Act (sections 18 and following).

Public funds are allocated to political parties based on their “rootedness in society“, i.e. on their success in elections to the European Parliament, to the Bundestag and to parliaments of the federal states, and on the amount of cash contributions received (membership dues, 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, received at least 0.5 per cent or, in an election to a state parliament, received 1 per cent of the valid votes cast for party lists (section 18 (4) sentence 1 of the Political Parties Act).

Amount of public funding

Political parties generally receive the following amounts per year:

• 0.83 euros for each valid vote cast for the party list or, if a list for that party was not admitted in a federal state, each valid vote cast for a party in a constituency or polling district;
• 0.45 euros 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 are counted.

For their first 4 million votes, parties receive 1 euro instead of 0.83 euros (section 18 (3) of the Political Parties Act). This is to compensate for the advantage enjoyed by well-established parties over newly formed, smaller parties.

However, the amount of public funding must not exceed the income generated from the party’s own sources (relative upper limit, section 18 (5) sentence 1 of the Political Parties Act). In other words, parties must provide at least half of their own funding.

There is a fixed upper limit for the overall amount of public funds to be allotted to all eligible parties (section 18 (5) sentence 2 of the Political Parties Act). In 2023, this amount was 209,603,161 euros. It is regularly adjusted to general price trends.

If the amount of public funding exceeds the absolute 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) sentence 4 of the Basic Law). The Political Parties Act governs the details (sections 23 and following), stipulating 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:

• income
• 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 or she also checks the statement to verify its proper form and accuracy and its compliance with the requirements in Part V of the Political Parties Act. If there is concrete evidence that the statement of accounts contains inaccurate information, the president must clarify the facts (section 23 (3) sentence 1 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 and following of the Political Parties Act).

Transparency for major donations

The obligation of political parties to submit their statements 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 who contribute more than 500 euros. The statements of accounts must list donations and contributions paid by elected representatives/officials amounting to more than 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 35,000 euros must be reported immediately to the president of the German Bundestag, who then publishes the amount donated and the donor’s name in a Bundestag printed paper as soon as possible (section 25 (3) of the Political Parties Act).

Advertising by third parties also counts as a donation and is subject to the relevant law unless the political party immediately demands an end to such advertising as soon as it becomes aware of it (sections 27 (1a) and 27a of the Political Parties Act).

Date of revision: 03 December 2024