Local authorities shall be entitled, in exercising their powers, to co-operate and, within the framework of the law, to form consortia with other local authorities in order to carry out tasks of common interest.
The principle of autonomy includes the power of local authorities to decide for themselves whether a certain task can be performed autonomously or together with other administrative bodies (the so-called right to cooperation, BVerfGE 138, 1, 17ff.). This right of intermunicipal cooperation is further developed by the federal states in their own laws. Intermunicipal cooperation can take place institutionally, for example through a single purpose administrative association (e.g. in the legal form of a Zweckverband), or it can be regulated by contract.
Germany has a long tradition when it comes to local and regional cooperation. Examples of inter-municipal cooperation include policy to develop settlement areas and commercial premises, Land conversion, the formulation of development concepts, general economic services (esp. local public transport, sewage and waste disposal, and health) and finding sites on which to build large-scale shopping centres. Inter-municipal cooperation has for years also been an expression of a new understanding of the planning process. Actors from the realms of politics, administration, business, and science network their skills and competences and use them to mutual benefit. This new form of cooperation presupposes a large degree of openness to new approaches, mutual trust, a willingness to compromise and thinking in terms of the bigger picture. It ranges from legal requirements and incentives to voluntary cooperation in order to use synergies.
Inter-municipal or regional cooperation occurs at various levels, sometimes across regional borders (inter-regional cooperation). Besides cooperation between towns/cities and their surrounding areas (e.g. the Berlin-Brandenburg Local Neighbourhood Forum and the Lower Saxony/Hamburg Neighbourhood Forum), such cooperation can be found in Germany’s 12 metropolitan regions, which provide a suitable regional frame of reference for cooperative projects in various sub-areas. Initiatives aimed at developing urban regions can also be found beyond these metropolitan regions in the shape of self-organisation processes based on regional players’ initiatives. They can especially be found in regional concepts (e.g. the Rostock Regiopol Region and other members of the German Regiopol Network).
The New Leipzig Charter, which was adopted in late 2020 during Germany’s EU Council Presidency by the ministers responsible for urban development to provide a framework for integrated and sustainable urban development in Europe, explicitly welcomes inter-municipal cooperation and calls on local authorities to coordinate their political strategies and measures with surrounding and urban regions, in particular when it comes to housing, commercial premises, mobility and energy supply. Inter-municipal cooperation can make an important contribution to boosting the transformative power of towns/cities and municipalities so they can become sustainable, resilient and liveable spaces.
The Territorial Agenda 2030, which was adopted in December 2020 during Germany’s EU Council Presidency by the ministers responsible for regional planning, regional development and/or territorial cohesion in order to provide an action-oriented framework for promoting territorial cohesion in Europe, variously emphasises the need for inter-municipal cooperation to meet global social challenges and to improve working, living and business conditions. A particular focus is placed on the priority areas “functional regions” and “integration beyond borders”.
In the State of Saxony, the performance of tasks within the framework of inter-municipal cooperation is an important option for municipal action that preserves the autonomy and identity of the municipalities. Special-purpose associations, the so called “Zweckverbände” and special-purpose agreements, the so-called “Zweckvereinbarungen” are the most frequently used legal forms of municipal cooperation. The main areas in which Saxon municipalities cooperate are in the fields of water supply and sewage disposal, registry office and registration, tourism promotion, fire brigade and rescue service, EDP and IT, spatial planning and development, public order and local public transport, economic and regional promotion.
By far, most of cooperation exists in the area of wastewater/water management; this cooperation has proven to be particularly effective, as many municipalities are too small for the optimal size of operation and the provision of services is extremely capital-intensive. In this area, the costs of the municipalities can be reduced through cooperation. The organisation in the form of a special-purpose association far outweighs the other options, as the complete task is handed over to the special-purpose association as the new task bearer.
In the areas of registry office and fire/rescue services, the aim is not only to reduce fixed costs but also to make efficient use of human resources. Larger municipalities often take over the tasks for smaller ones, which is why the conclusion of special-purpose agreements dominates in these task areas.
The tasks of spatial planning and development and economic and regional promotion are among the typical areas of municipal cooperation; here there is a higher proportion of cooperation in working groups where the focus is on regular exchange and coordination in the run-up to decisions.
In Bavaria, the legal framework for inter-municipal cooperation is regulated in the Law on Communal Cooperation – KommZG . This provides for possible legal forms of municipal cooperation: Working communities, special-purpose agreements, special-purpose associations as well as joint municipal enterprises (Art. 2 par. 1 and 4 KommZG). In addition, there is the possibility of informal cooperation.
Population development, scarce financial resources, technological developments, growing competition between regions in the European and global context, as well as the increased expectations of citizens and businesses regarding the type and quality of municipal services pose ever greater challenges to municipalities. In some areas, declining population numbers are reducing economic strength, which can reduce the revenues of municipal budgets. Existing infrastructure facilities are no longer being used to capacity. The increasing aging of the population is changing the demands on municipal infrastructure and public services.
Inter-municipal cooperation is a forward-looking strategy with high potential. Together, numerous municipal tasks can be better solved. In order to secure their ability to perform and act, numerous municipalities perform their tasks jointly, thereby benefiting from the synergy effects without losing their independence. Since December 2012, the Free State of Bavaria has been promoting new exemplary inter-municipal cooperation projects. The aim is to strengthen municipal self-administration and maintain the municipal capacity to act through inter-municipal cooperation.
It is worth mentioning that a great deal of inter-municipal cooperation takes place through municipal companies, especially in the area of services of general interest (water, wastewater, waste, energy or telecommunications). The same applies to the development of joint commercial areas or transport projects.
In several cases, inter-municipal cooperation is developed (often on a contractual basis) in the wider area of an urban centre and the surrounding municipalities. The latter take advantage of the capacities of their urban neighbour, while in many cases, considerable economies of scale can be earned. The city of Freiburg, for instance, has a contract with the municipality of Merzhausen for the provision of a fire brigade. Merzhausen is thus one of four municipalities in Baden-Württemberg that does not have its own fire brigade. With most of the surrounding municipalities, Freiburg also has cooperation agreements on so-called supra-local assistance (“Überörtliche Hilfe“) for special vehicles or special extinguishing agents. Cooperation has also been developed in public transport, water, energy and sewage.
Nevertheless, according to the National Associations of local authorities, municipal cooperation must be facilitated and promoted in Germany, but it is, on the contrary, being hampered administratively and legally (especially by added value taxation, § 2 b UStG/EU VAT system directive). This results in taxation of the municipalities for the joint performance of statutory tasks, with the corresponding burden on the budget of citizens, the economy, and the municipalities themselves.
Concerning this aspect, representatives of the federal government have stressed that the new rules on value-added tax for legal persons governed by public law in Germany, in the form of section 2b of the VAT Act, constitute an unavoidable amendment of national law for reasons of Union law (Article 13 of Council Directive 2006/112/EC on the common system of value added tax). Under this amendment, the same tax regulations will apply to cooperation among legal persons governed by public law at all levels of government (federal, state, and local) that apply to cooperation among and with private enterprises, if treating legal persons governed by public law as non-taxable persons would result in significant distortions of competition. In view of emerging difficulties, the German law provides for a long transitional period of some seven years (starting 1 January 2023) before section 2b of the VAT Act becomes obligatory. This allows all those involved to prepare for the new rules and to revise their processes and structures as needed.
In spite of aforementioned complaints, the impression of the rapporteurs is, according to the aforementioned, that inter-municipal cooperation is highly developed in Germany and the country complies with this paragraph of the Charter.