Article 104 A Apportionment of Expenditure
(1) The Federation and the States separately meet the expenditure resulting from the discharge of their respective tasks insofar as this Constitution does not provide otherwise.
(2) Where the States act as agents of the Federation, the Federation meets the resulting expenditure.
(3) Federal statutes to be executed by the States and granting money payments may make provision for such payments to be met wholly or in part by the Federation. Where any such statute provides that the Federation meets one half of the expenditure or more, it is implemented by the States as agents of the Federation.
(4) Federal statutes establishing duties of the States to contribute money, benefits in kind, or similar services towards third parties and executed as matters of their own concern or according to Paragraph III as agents of the Federation require the consent of the Senate if resulting expenses are to be met by the States
(5) The Federation and the States meet the administrative expenditure incurred by their respective authorities and are responsible to each other for ensuring proper administration. Details are regulated by a federal statute requiring the consent of the Senate .
(6) Federation and States carry the burden resulting from supranational and international responsibilities of Germany according to the national division of competencies and responsibilities. In cases of financial adjustments by the European Union affecting more than one State , Federation and States carry the burden at the ratio of 15 to 85. The States at large provide 35% of the total burden in solidarity according to an allocation key; the States which have caused the obligation carry 50% of the total burden according to their share in the funds received. Details are regulated by a federal statute requiring the consent of the Senate .
Article 104 B Financial Support for Investments
(1) The Federation may, as far as this Constitution grants federal legislative power, provide the States with financial support for particularly important investments by the States or Communes (associations of communes), if such support is necessary
- for the devense against a disturbance of the overall economic equilibrium, or
- to equalize differences of economic performance throughout the federal territory, or
- for the advancement of economic growth.
- In deviation from sentence 1, the Federation may, in the case of natural catastrophes or exceptional emergencies outside of state control and with serious negative impact on public finances, grant financial support even without legislative power.
(2) Details, in particular the kinds of investments to be supported, are regulated by a federal statute requiring the consent of the Senate or by administrative agreement on the basis of the federal statute about the budget. The funds are provided with a time limit and are subject to periodic examination regarding their utilization. Financial support has to be designed with decreasing yearly payments during its duration.
(3) On their request, House of Representatives , Government, and Senate have to receive a report about the implementation of the measures and about the improvements achieved.
Article 105 Legislative Powers
(1) The Federation has exclusive power to legislate on customs duties and fiscal monopolies.
(2) The Federation has concurrent power to legislate on all other taxes the revenue from which accrues to it wholly or in part or where the conditions provided for in Article 72 II apply.
(2a) The States have power to legislate on local excise taxes as long and insofar as they are not identical with taxes imposed by federal legislation. They have the power to set the rate for the tax on real estate sales.
(3) Federal laws relating to taxes the receipts from which accrue wholly or in part to the States or communes or associations of communes require the consent of the Senate .
Article 106 Apportionment of Revenue
(1) The yield of fiscal monopolies and the revenue from the following taxes belongs to the Federation:
- customs duties;
- excise taxes insofar as they do not accrue to the States pursuant to Paragraph II, or jointly to the Federation and the States in accordance with Paragraph III, or to the communes in accordance with Paragraph VI;
- road freight tax, motor vehicle tax and other traffic taxes related to motorized vehicles;
- capital transaction taxes, the insurance tax, and the bill of exchange tax;
- nonrecurrent levies on property, and contributions imposed for the purpose of implementing the equalization of burdens legislation;
- income and corporation surtaxes;
- charges imposed within the framework of the European Communities.
(2) Revenue from the following taxes belong to the States :
- wealth tax;
- inheritance tax;
- such taxes on transactions as do not accrue to the Federation pursuant to Paragraph I or jointly to the Federation and the States pursuant to Paragraph III;
- beer tax;
- gaming casinos levy.
(3) Revenues from income taxes, corporation taxes, and turnover taxes belong jointly to the Federation and the States (joint taxes) to the extent that the revenue from the income tax and turnover tax is not allocated to the communes pursuant to Paragraphs V and Va respectively. The Federation and the States equally share the revenues from income taxes and corporation taxes. The respective shares of the Federation and the States [LÃ¤nder] in the revenue from the turnover tax are determined by a federal statute requiring the consent of the Senate [Bundesrat]. Such determination is based on the following principles:
- The Federation and the States have an equal claim to coverage from current revenues of their respective necessary expenditures. The extent of such expenditures is determined giving due consideration to financial planning for several years ahead.
- The coverage requirements of the Federation and of the States are coordinated in such a way that a fair balance is struck, any overburdening of taxpayers precluded, and uniformity of living conditions in the federal territory ensured.
- In addition, for the apportionment of the value added tax to Federation and States it will be taken into account that after 1 Jan. 1996 the States income tax revenues will be reduced due to child benefits. Details are regulated by the federal statute according to Sentence 3.
(4) The respective shares of the Federation and the States to the revenue from the turnover tax are newly apportioned whenever the relation of revenues to expenditures in the Federation develops substantially differently from that of the States ; this does not apply to reduced tax revenues which are included into the calculation of the apportionment of value added tax according to Paragraph III 5. Where federal legislation imposes additional expenditures on or withdraws revenue from the States , the additional burden may be compensated for by allocation of federal grants under a federal statute requiring the consent of the Senate provided such additional burden is limited to a short period of time. Such statute lays down the principles for calculating such grants and distributing them among the States .
(5) A share of the revenue from the income tax belongs to the communes, to be passed on by the States to their communes on the basis of income taxes paid by the inhabitants of the latter. Details are regulated by a federal statute requiring the consent of the Senate [Bundesrat]. Such statute may provide that communes assess the rate which is applicable to this communal share.
(5a) From 1 Jan 1998, a share of the revenue from the turnover tax belongs to the communes. This share is to be passed on by the States to their communes on the basis of an index about locality and economic power. Details are regulated by a federal statute requiring the consent of the Senate .
(6) Revenue from taxes on real estate and on local industry and trade belongs to the communes; revenue from local excise taxes belongs to the communes or, as may be provided for by State legislation, to associations of communes. Communes are authorized to assess, within the framework of the relevant statutes, the rates at which the taxes on real estate and on local industry and trade are levied locally. Where there are no communes in a State , revenue from taxes on real estate and on local industry and trade as well as from local excise taxes belongs to the State . The Federation and the States may participate, by virtue of an apportionment, in the revenue from the tax on local industry and trade. Details regarding such apportionment are regulated by a federal statute requiring the consent of the Senate . In accordance with State legislation, taxes on real estate and on local industry and trade as well as the communes' share of revenue from the income tax may be taken as a basis for calculating the amount f apportionment.
(7) An overall percentage, to be determined by State legislation, of the State share of total revenue from joint taxes belongs to the communes or associations of communes. In all other respects State legislation determines whether and to what extent revenue from State taxes belong to communes or associations of communes.
(8) Where in individual States or communes or associations of communes the Federation causes special facilities to be provided which directly result in an increase of expenditure or a loss of revenue to these States or communes or associations of communes, the Federation grants the necessary compensation where and insofar as such States or communes or associations of communes cannot reasonably be expected to bear such special burden. In granting such compensation, due account is being taken of thirdparty indemnities and financial benefits accruing to the States or communes or associations of communes concerned as a result of provision for such facilities.
(9) For the purpose of this Article, revenues and expenditures of communes or associations of communes are deemed to be State revenues and expenditures.
Article 106 A State Share for Public Local Transport
Starting 1 Jan. 1996, the States can claim a sum out of federal tax revenues for the public local transport of persons. Details are regulated by a federal statute requiring the consent of the Senate. The sum mentioned in the first sentence is not included in the calculation of financial strength according to Article 107 II.
Article 106 B Compensation for Transfer of Motor Vechicle Tax
Starting 1 July 2009, the States can claim a sum out of federal tax revenues for the transfer of the motor vehicle tax to the Federation. Details are regulated by a federal statute requiring the consent of the Senate .
Article 107 Financial Equalization
(1) Revenue from State taxes and the State share of revenue from income and corporation taxes belongs to the individual States to the extent that such taxes are collected by revenue authorities within their respective territories (local revenue). A federal statute requiring the consent of the Senate may provide in detail for the delimitation as well as the manner and scope of allotment of local revenue from corporation and wage taxes. Such statute may also provide for the delimitation and allotment of local revenue from other taxes. The State share of revenue from the turnover tax belongs to the individual States on a per capita basis; a federal statute requiring the consent of the Senate may provide for supplementary shares not exceeding one quarter of a State share to be granted to States whose per capita revenue from State taxes, from the income and corporation taxes and according to Article 106b is below the average of all the States combined; in the case of real estate transfer tax, the difference in revenue has to be taken into account.
(2) It has to be ensured by statute, that a reasonable equalization between financially strong and financially weak States is achieved; due consideration being given to financial capacity and financial requirements of communes or associations of communes. Such statute has to specify the conditions governing equalization claims of States entitled to equalization payments and equalization liabilities of States owing equalization payments as well as the criteria for determining the amounts of equalization payments. Such statute may also provide for grants to be made by the Federation from federal funds to financially weak States in order to complement the coverage of their general financial requirements (supplementary grants).
Article 108 Revenue Administration
(1) Customs duties, fiscal monopolies, excise taxes subject to federal legislation, including the import turnover tax, motor vehicle tax and other traffic taxes related to motorized vehicles as well as charges imposed within the framework of the European Communities are administered by federal revenue authorities. The organization of these authorities is regulated by federal statute. Where authorities at the intermediate level are established, their heads are appointed in consultation with the respective State governments.
(2) All other taxes are administered by State revenue authorities. The organization of these authorities and the uniform training of their civil servants may be regulated by a federal statute requiring the consent of the Senate . Where authorities at the intermediate level are established, their heads are appointed in agreement with the Government.
(3) To the extent that taxes accruing wholly or in part to the Federation are administered by State revenue authorities, those authorities act as agents of the Federation. Article 85 III & IV applies with the Minister of Finance being substituted for the Government.
(4) Regarding the administration of taxes, a federal statute requiring the consent of the Senate may provide for collaboration between federal and state revenue authorities as well as, for taxes according to Paragraph I, for their administration by state revenue authorities, and, in the case of other taxes, for their administration by federal revenue authorities, if and insofar as the implementation of revenue statutes is substantially improved or facilitated. Regarding taxes the revenue from which belongs exclusively to communes (associations of communes), the administration may completely or in part be transferred by the States from the appropriate state revenue authorities to communes (associations of communes).
(5) The procedure to be applied by federal revenue authorities is laid down by federal legislation. The procedure to be applied by State revenue authorities or, as envisaged in Paragraph IV 2, by communes or associations of communes may be laid down by a federal statute requiring the consent of the Senate .
(6) The jurisdiction of revenue courts is uniformly regulated by federal legislation.
(7) The Government may issue appropriate general administrative rules which, to the extent that administration is entrusted to State revenue authorities or communes or associations of communes, require the consent of the Senate .
Article 109 Budget Management
(1) The Federation and the States are autonomous and independent of each other in their budget management.
(2) The Federation and the States give due regard in their budget management to the requirements of overall economic equilibrium.
(3) The budgets of Federation and States principally have to be balanced without revenue from credits. Federation and States may adopt rules to symmetrically ballance in boom and bust periods the effects of economic cycles deviating from normality as well as exceptions for natural catastrophes or exceptional emergencies outside of state control and with serious negative impact on public finances. Equivalent amortization rules have to be adopted for exceptions. Details are regulated for the budget of the Federation according to Article 115, provided that sentence 1 is complied with if revenues from credits do not exceed 0.35 percent in relation to the nominal gross domestic product. Details are regulated for the budget of the States within their constitutional competencies, provided that sentence 1 is only complied with if no revenues from credits are admitted.
(4) Through federal legislation requiring the consent of the Senate [Bundesrat] principles applicable to both the Federation and the States may be established governing budgetary law, responsiveness of budget management to economic trends, and financial planning to cover several years ahead.
(5) Sanctions by the European Community with regard to provisions in Article 104 of the Treaty establishing the European Community about the observance of fiscal discipline are borne by the Federation and the States in the ratio 65 to 35.
Article 109 A Stability Council
To prevent budget emergencies, a federal statute requiring the consent of the Senate provides for
1. continuous control of the budget management of Federation and States by a common body (stability council),
2. preconditions and procedure for the declaration of an imminent budget emergency,
3. principles for the establishment and implementation of restructuring programs to prevent budget emergencies.
The decisions of the stability council and the documentation of its deliberation have to be published.
Article 110 Budget Law
(1) All revenues and expenditures of the Federation are included in the budget; in respect of federal enterprises and special assets, only allocations thereto or remittances therefrom need be included. The budget has to be balanced as regards revenue and expenditure.
(2) The budget is laid down in a statute covering one year or several fiscal years separately before the beginning of the first of those fiscal years. Provision may be made for parts of the budget to apply to periods of different duration, but divided into fiscal years.
(3) Bills within the meaning of Paragraph II 1 as well as bills to amend the budget statute and the budget are submitted simultaneously to the Senate and to the House of Representatives ; the Senate is entitled to state its position on such bills within six weeks or. in the case of amending bills, within three weeks.
(4) The budget statute may contain only such provisions as apply to revenues and expenditures of the Federation and to the period for which the budget statute is being enacted. The budget statute may stipulate that these provisions cease to apply only upon the promulgation of the next budget statute or, in the event of an authorization pursuant to Article 115, at a later date.
Article 111 Interim Budget
(1) Where, by the end of a fiscal year, the budget for the following year has not been laid down by statute, the Government may, until such statute comes into force, make all payments which are necessary:
- to maintain statutory institutions and to carry out measures authorized by statute;
- to meet the Federation's legal obligations;
- to continue building projects, procurements, and other services, or to continue to grant subsidies for these purposes, provided that amounts have already been appropriated in the budget of a previous year.
(2) To the extent that revenues provided by specific legislation and derived from taxes or duties or any other sources, or the working capital reserves, do not cover the expenditures referred to in Paragraph I, the Government may borrow the funds necessary for the conduct of current operations up to a maximum of one quarter of the total amount of the previous budget.
Article 112 Excessive Expenditures
Expenditures in excess of budgetary appropriations and extra budgetary expenditures require the consent or the Minister or Finance. Such consent may be given only in the case of an unforeseen and compelling necessity. Details may be regulated by federal legislation.
Article 113 Changing of Expenditures/Revenues
(1) Statutes increasing the budget expenditures proposed by the Government or involving or likely in future to cause new expenditures requires the consent of the Government. This also applies to statutes involving or likely in future to cause decreases in revenue. The Government may demand that the House of Representatives postpone its vote on such bills. In this case the Government states its position to the House of Representatives within six weeks.
(2) Within four weeks after the House of Representatives has adopted such a bill, the Government may demand that it votes on that bill again.
(3) Where the bill has become a statute pursuant to Article 78, the Government may withhold its consent only within six weeks and only after having initiated the procedure provided for Paragraph I 3 & 4 or in Paragraph II. Upon the expiry of this period such consent is deemed to have been given.
Article 114 Audit
(1) The Minister of Finance on behalf of the Government has to submit annually to the House of Representatives and to the Senate for their approval an account, covering the preceding fiscal year, of all revenues and expenditures as well as of property and debt.
(2) The Federal Audit Office, the members of which enjoy judicial independence, audits the account and examines the management of the budget and the conduct of business as to economy and correctness. The Federal Audit Office submits an annual report directly to the Government as well as to the House of Representatives [Bundestag] and to the Senate . In all other respects the powers of the Federal Audit Office are regulated by federal legislation.
Article 115 State Credit
(1) The borrowing of funds and the assumption of pledges, guarantees or other commitments, as a result of which expenditure may be incurred in future fiscal years, requires federal legislative authorization indicating, or permitting computation of, the maximum amounts involved.
(2) Revenue and expenditure are principally to be balanced without revenues from credits. This principle is satisfied if revenues from credits do not exceed 0.35 percent in relation to the nominal gross domestic product. Furthermore, in the case of economic cycles deviating from normality, effects on the budget have to be factored in by symmetrically ballancing boom and bust periods. Deviations of actual borrowing from the credit limit outlined by sentences 1 to 3 are to be registered on a control account; debits exceeding the threshold of 1.5 percent in relation to the nominal gross domestic product have to be reduced with the economic cycle. Details, particularly the balancing of revenue and expenditure by financial transactions and the procedure for the calculation of the yearly limit of net borrowing in consideration of the economic cycle on the basis of an economic cycle equalization procedure as well as the control and readjustment of effective borrowing against the credit limit, are regulated by a federal statute. In the case of natural catastrophes or exceptional emergencies outside of state control and with serious negative impact on public finances, these credit limits may be exceeded by a decision of the majority of the members of the House of Representatives . The decision has to be combined with an amortization plan. The readjustment of borrowing according to sentence 6 has to be carried out within an adequate space of time.