Germany is Europe's largest and the world's fourth largest economy. The country is one of the biggest commodity consumers worldwide, particularly in terms of mineral resources. While generally regarded as a resource-poor country, it has relatively large deposits of lignite, potash and rock salt as well as aggregate materials and soils for the construction industry. Germany also produces some oil and gas, mainly in North Germany and the North Sea.
One of the main issues in Germany’s extractive sector concerns the future of brown coal. The government has formed a multi-stakeholder commission to plan for a sustainable transition to low-carbon energy generation while lessening the impact it has on the mining regions.
Since 2016, Germany has implemented the EITI at the national level with the aim to strengthen dialogue and transparency in raw materials policy. Germany uses the EITI platform to consolidate decentralised information on the extractive sector, highlight the environmental and social rules governing the sector and promote dialogue between the government, civil society and companies.
Economic contribution of the extractive industries
- to government revenues
- to exports
- to GDP
- to employment
- Germany EITI (D-EITI) has helped inform a change in the Federal Mining Act in 2017, which now allows for public access to mining license information without needing to prove legitimate interest.
- Germany’s EITI Reports, developed by the multi-stakeholder group, go beyond the EITI Standard too include information of public interest, such as environmental protection laws, water usage, state subsidies and renewable energies.
- Germany EITI developed an online portal with information from its 2017 EITI Report, with reconciled figures and links to systematic government disclosures.
- Germany's 2018 and 2019 EITI Reports used a new approach on payment reconciliation as part of a pilot project on alternative approaches to EITI reporting based on collating and analysing systematically disclosed data.
Germany’s extractive sector is mainly governed by the Federal Mining Act (BBergG). The sector is primarily regulated by the Ministry for Economic Affairs and Energy. However, due to Germany’s federal structure, the mining authorities of Federal States implement the Act and bear the responsibility for the authorisation and supervision of mining. Federal States have passed some of their own mining regulations in order to meet the specific requirements and characteristics of their own regions.
Tax administration is split between the Federal Government and the states. Non-tax revenues, such as royalites, are paid on the state level, while the trade tax is paid on the municipal level. Because of stringent tax confidentiality laws, the companies participating in reconciliation need to grant tax authorities an exemption from tax secrecy. The 2016 EITI Report included first-time disclosures on the total contribution of each company to different tax authorities on different political levels.
For "free-to-mine" natural resources, exploration and extraction rights are granted by the mining authorities of the Federal States in a two-stage procedure: firstly, the granting of a mining license (public-law concession) and secondly, the site-specific approval of the operating plan procedure. Extraction rights for natural resources that are privately owned or the property of landowners are subject to different licensing procedures.
While license information is disclosed in different formats by Federal States, Germany EITI publishes consolidated data on mining authorisations.
The German government established a beneficial ownership register in 2017 within the framework of the Fourth Anti-Money Laundering Directive (EU) 2015/849, which requires member states to hold a central register of beneficial owners. However, the register is not freely accessible and requires proof of legitimate interest in order to access information.
The distribution of extractive revenues between the Federal Government, the states and the municipalities is regulated by Article 106 of the Basic Law (GG), which distinguishes between "community taxes" and taxes which flow in their entirety to the municipalities, states or Federal Government. The Federal Government and the states are each allocated 50% of corporate tax revenues, which are considered community taxes.
Royalties are paid to the federal states and are not earmarked, but part of the budget of the federal states. There is no direct sharing mechanism for royalties in Germany, but the general financial equalisation mechanism, that aims to equalise financial power of federal states in Germany, includes royalties in the “income” category of the calculation mechanism.
The Federal Government is entitled to the revenues from electricity and energy taxes. Trade tax, on the other hand, is collected by municipalities in which the relevant operating facilities are situated. A share of the revenues from trade tax is allocated to the Federal Government and the Federal States through a specific redistribution mechanism.
As per the Tax Code, tax revenues from the extraction of natural resources are not earmarked for specific purposes.
Germany EITI (D-EITI) is administered by the Germany Multi-Stakeholder Group (MSG). The MSG is chaired by the Winfried Horstmann, Head of the Industrial Policy Department of the Federal Ministry for Economic Affairs and Climate Action (BMWK). His alternate and National Coordinator, Andrea Jünemann, is Head of Division for International Raw Materials Policy. Dr. Franziska Brantner, Parliamentary State Secretary at BMWK, is the EITI champion.
To manage the national secretariat, the BMWK has contracted Germany’s technical assistance agency, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). This is mainly due GIZ’s longstanding experience with the EITI through technical support in other implementing countries.
Germany was found to have made satisfactory progress in implementing the 2016 EITI Standard in May 2019, following its first Validation. The next Validation is expected to commence in October 2023.
Moreover, in June 2020, The EITI Board agreed that Germany made satisfactory progress in implementing EITI Requirement 2.5 on beneficial ownership.