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Allocation of EU Financial Sanctions under Article 109(5) 
of the Basic Law
Where financial corrections have effect over more than one Land, the federation and the
Länder
bear these costs at a ratio of 65:35 per cent.
The 
Länder
as a whole “in solidarity” bear 35% of the charges incumbent on the 
Länder
according to the number of their inhabitants; 65% of the charges incumbent on the
 Länder
shall be borne by the 
Länder
according to their degree of causation.
Details shall be regulated by a federal law which shall require the consent of the
Bundesrat
.

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BUDGET REVIEW: GERMANY
OECD JOURNAL ON BUDGETING – VOLUME 2014/2 © OECD 2015
32
In and of themselves, therefore, the Stability Council’s workings serve to promote a
shared understanding of the scale of budgetary challenges facing the nation as a whole
and the federation or the 
Länder
individually, and to agree plans for addressing such issues;
compliance is a matter of peer discussion rather than tangible sanctions. However, the
Council’s operations should also be seen in the context of Article 109(5) of the Basic Law
which specifies how any financial penalties arising under the SGP will be allocated across
levels of government (see Box 7). Moreover, several 
Länder
are committed to progressive
reductions of their debt levels as a condition for receipt of federal assistance (see next
section). Taken together, the Stability Council arrangement and the constitutional budget
rules should promote a coherent national response to the fiscal constraints, both domestic
and EU-related, facing the country.
Given the strong focus of its work on budgetary surveillance and on the calculation of
the economic cycle (which is relevant for the debt brake and the SGP), it is important that
Box 7.