Report No. 255

(ii) Germany

Expenses

2.25.1. There are no limits on political parties' campaign expenditur.- whether the total amount, or expenditure on specific items for the campaign, or routine spending, although Section 1(4) of the Political Parties Act, 1967 stipulates that parties shall "use their funds exclusively for performing the functions incumbent on them under the Basic Law and the Act". Thus, there are no qualitative or quantitative restrictions on party spending on elections or daily business.57 Consequently, there does not seem to be any limits on how much candidates can spend.

57. IDEA, Political Finance Data for Germany,
<http://www.idea.int/politicalfinance/country.cfm?id=61>

Contributions

2.25.2. Section 25 of the Political Parties Act makes it clear that there are no limits on the amount of contributions to political parties and that and donations up to € 1000 can be made in cash. While small donations and party membership dues are tax deductible since 1967, pursuant to a Supreme Court order in 1994, corporate donations are not deductible.58 Further, section 25 prohibits corporate donations to political parties if the State's direct participation in the company is more than 25%.

58. US Library of Congress, Campaign Finance: Germany,
<http://www.loc.gov/law/help/campaign-finance/germany.php#t39>

2.25.3. However, under section 25, donations from charitable organisations, trade unions, professional associations, and industrial or commercial associations are prohibited. Further, anonymous donations of more than € 500 to political parties are also prohibited.

2.25.4. The law is silent on donations to individual candidates, although it seems permissible (even foreign donations to candidates do not seem to be prohibited). In any event, while there are parliamentary rules governing disclosure in such cases, donations to individual candidates does not seem as important given that section 25(1) requires candidates to turn over the donations to the Executive Committee member of the party "immediately".59

59. Id.; IDEA Germany, supra note 57

Disclosure

2.25.5. Article 21(1) of the Basic Law requires parties to "publicly account for their assets and for the sources and use of their funds". Disclosure is regulated under Section V of the Political Parties Act, 1967, which requires an annual reporting of origin of funds, statement of income and expenditure, and party assets and liabilities, along with a list of big donors to the President of the German Bundestag. These annual reports are audited/verified by chartered accountants and under Section 22(4) published as legislative documents (after being presented before the German Parliament).

2.25.6. Thus, public disclosure (names and addresses) in the annual party financial statement under Section 25 of the Act is limited to big donors, with donations exceeding € 10,000 per year. Private donations greater than € 50,000 are required to be disclosed immediately under section 25 to the President of the German Bundestag. This has led to a move towards grass root financing and party membership donations towards a party's private income.

2.25.7. The party's annual report thus contains information under the following categories vide section 24(4) of the Ac.- membership dues; mandatory contributions of officials; individual donations; corporate donations; receipts from commercial activities and participation; receipts from other assets and from events, publications; and public funds.

2.25.8. Under sections 23 and 23a of the Political Parties Act, the Bundestag, who receives and publishes these annual financial statements also evaluates these statements to check for compliance with the provisions of the Act. Germany's Supreme Audit Institution, the BRH, further verifies under section 21, whether the procedures under section 23a have been complied with properly.

Penalties

2.25.9. Part VI of the Political Parties Act deals with procedures in case of inaccurate statements of accounts and other penal provisions and provides for fiscal and criminal sanctions for serious violations. Section 31b provides that in cases of inaccuracies in financial statements detected by the President of the German Bundestag (causing a party to obtain more public funds than due), the President makes the appropriate adjustment and fines the party twice the amount of the wrongly stated sum or 10% of the value of its assets/participating interests, if the inaccuracy arose from there.

2.25.10. Section 31c provides that in cases where the party either (a) fails to disclose a donation in its statement of accounts or (b) retains/has illegally obtained donations, without remitting them to the Bundestag, it will be liable to a penalty of two times the undisclosed amount or three times the illegally obtained amount respectively.

2.25.11. Section 31d provides for three years' imprisonment or a fine for intentional concealment of the "origin or the use of the party's funds or assets or [for] evading the obligation to render public account". Offences under this section are committed by the inclusion of inaccurate data in the party's financial statement; the incorrect breaking of big donations into smaller ones to avoid disclosure; or failure to remit the donation properly (to prevent unlisted slush funds from being created).60 Section 31d(2) also penalises an auditor or their assistants for falsifying an audit report/statement of accounts or for failure to disclose relevant facts with maximum three-year imprisonment or a fine.

60. LOC Germany, supra note 58