Overview

• Bavarian Minister President Markus Söder has warned he will terminate the Länderfinanzausgleich by the end of the decade if no interstate agreement on reforms is reached
• Thuringia’s finance minister Katja Wolf asserted that Article 107 of the Basic Law bars any unilateral withdrawal from the fiscal equalization scheme
• Former constitutional judge Peter Huber explained that a formal exit under Article 143d requires at least three states to call for renegotiation after December 2030 and a failure to pass new legislation within five years
• Federal Finance Ministry figures show the equalization fund hit a record €11 billion in the first half of 2025, with Bavaria contributing €6.7 billion and Berlin receiving €2 billion
• Bavaria’s 2023 constitutional challenge to the current distribution mechanism remains pending at the Federal Constitutional Court as pressure for a long-term overhaul grows