Germany

The Basic Law gives municipalities the right to run all local affairs on their own responsibility, “within the framework of the laws”. It also forbids federal law from handing them any task. Every national duty, from online services to heat plans, therefore reaches a town through its Land. Berlin, Hamburg and Bremen are city-states and hold both sets of powers.

• Broadband: private operators build and the Bundesnetzagentur, the federal regulator, regulates. A town cannot order fibre, but it can apply for federal gap funding, which approved €2bn in 2024 for more than 560 projects in about 1,700 municipalities, or build through its own utility.
• Public transport: under Land law, cities and districts order buses and trams. The price of the main monthly pass, the Deutschlandticket, is set nationally: €63 in 2026, rising to €66.80 in January 2027.
• Streets: traffic rules are federal. Since October 2024 a city may weigh climate, health and urban development when it sets bus lanes or 30 km/h zones near schools, but it still cannot make 30 km/h the rule across town.
• Policing and cameras: police law belongs to the Länder, while the federal police cover stations, airports and ports. A mayor can pay for cameras, but the Land decides whether software may watch them.
• Energy and heat: this is where towns are strongest. They award the concessions for local power and gas grids for up to 20 years, and more than 1,600 municipal companies belong to their association, VKU; many are Stadtwerke, municipal utilities that run grids, heat networks and buses.
• Planning: land-use plans are the municipality’s own. The 2025 “construction turbo”, which lets housing depart from a plan until 2030, works only with the town’s consent.
• Open data: the federal duty to publish raw data binds federal authorities only. Whether a city publishes depends on its Land or on its own choice; Hamburg’s 2012 transparency law made it compulsory there.
• Online services and the e-ID: the federal government and the Länder steer them through the IT-Planungsrat, the IT planning council. Services one Land builds “for all” must be run by every town, which pays to operate them but has only an advisory seat. In December 2025 the federal dashboard counted 1,615 services online in Hamburg, 1,557 in North Rhine-Westphalia and 964 in Baden-Württemberg, though the Saxon Court of Audit notes it cannot show how many meet the law’s standard.
• Procurement and open source: EU and federal procurement law apply everywhere. Since March 2026 standard federal contract terms have existed for buying open source, and where federal money required open code, as in the smart-city programme, towns published it.
• Skills: schools are a Land matter. A second Digital Pact gives €5bn for school digitalisation over 2026–2030. For the nearly 7m people aged 60 and over who are offline, a federal programme had €3.1m for 2023–25, enough for 150 local learning sites.

The split explains a pattern. German towns are strong where they own the asset or the plan, and weak where a service is defined above them and they must only deliver it. The heat plans, a duty with a deadline that landed on utilities the towns own, were delivered on time by most large cities. The online services, a duty without a vote, missed theirs.

And the money is short. In 2025 the municipalities ran a record deficit of nearly €32bn, according to the Bertelsmann Stiftung, a private foundation. In August 2026 Burkhard Jung, Lord Mayor of Leipzig and president of the Deutscher Städtetag, the association of cities, said the mood in the town halls had “never been as bad as it is today”.

The three municipal associations, for cities, towns and rural districts, fill the advisory seats on the IT planning council; in January 2026 the Deutscher Städte- und Gemeindebund asked for “digital only” processes with help in person. The KTS, the smart-city programme’s transfer office, helps towns reuse each other’s work. It is run by DLR Projektträger, the grants arm of the German Aerospace Center, with partners including Fraunhofer, the urban-studies institute Difu and the hacker association Chaos Computer Club.

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Around them sit an incumbent, challengers and foreign suppliers. Deutsche Telekom still runs most copper lines, Palantir supplies police analysis software to several Länder, and the applied-research society Fraunhofer builds much of the software towns test. Watching them are civil-rights groups such as the Gesellschaft für Freiheitsrechte and the news site netzpolitik.org, which published an audit-office report on the digital ministry that was not meant for publication.

Friedrich Merz’s coalition of the Christian Democrats (CDU/CSU) and the Social Democrats (SPD) took office in May 2025 and created a federal ministry for digital affairs and state modernisation. Its minister, Karsten Wildberger, came from running the electronics retailer Ceconomy. The ministry took over broadband policy, the steering of online services and a veto over large federal IT purchases. Its promise to towns is to bring them “existing digital services” they do not yet have. The national smart-city programme stayed with the ministry for housing and urban development.

That programme, Modellprojekte Smart Cities, chose 73 municipalities in three rounds from 2019 and announced about €820m for them. It paid 65% of their costs, or 90% for towns in budget distress, and from 2022 required the software it funded to be published as open source on openCode, the public code platform. By 30 November 2024, €146m of the €691m committed had been paid out, 21%. The government blamed procurement, the pandemic and staffing: a quarter of the posts the programme created could not be filled.

Its evaluation of the strategy phases found that towns had left about €28m of their planning money unused by the end of 2023. Only the implementation phases, it said, would show whether the goals were met; the final evaluation is due in 2030. The original funding period ends in 2026, though towns in the third round may stretch their grants, at no extra cost, into 2027 or early 2028. The programme’s spring congress was given over to how towns can keep what they built.

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The bigger federal bet is the Deutschland-Stack, which Wildberger describes as a shared digital operating system for the federal government, the Länder and the municipalities. In July 2026 the federal audit office found that the ministry had not mapped its risks or set milestones, and that key decisions were still open. As with online services, the towns would have no vote: the municipal management association KGSt has asked for votes, not consultation, and a clear answer on who pays.

Germany’s recovery plan has €30.3bn in EU grants, 47.5% of it for digital aims, including €2.5bn to put federal and Land services online. Nine German cities are among the 112 in the EU mission for climate-neutral and smart cities by 2030; by November 2025 all but Frankfurt held the mission label for their plans.

Sovereignty is moving into procurement, slowly at federal level and quickly in one Land. ZenDiS, a federal company, develops openDesk, an open-source office suite for the public sector, which in April 2026 was being tested on about 80 workstations in the digital ministry itself. Schleswig-Holstein, a northern Land, is moving its administration off Microsoft: by October 2025, 90% of its staff email accounts ran on open-source software.

The sharpest argument is about surveillance. In February 2023 the Constitutional Court struck down Hesse’s and Hamburg’s laws for automated police data analysis, though not Palantir’s software that ran on them. Bavaria’s contract for that software lets the other Länder and the federal government join. Baden-Württemberg’s interior ministry, led by the CDU, bought it separately for €25m over five years, without exit clauses. In July 2026, 92% of the Green members who voted opposed the contract on a 40% turnout; the vote is not binding, and the Green Minister-President is keeping it until a European alternative is ready.

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In September 2026 the Bundestag, the federal parliament, passed a law allowing the federal police to use live face matching and behaviour analysis at stations, airports and ports. The vote was a repeat: the July vote had lacked the absolute majority the law requires. The Bundesrat, the chamber of the Länder, approved it the same day. In the July debate Alexander Throm, a CDU member, said the law would “set the standard for the Länder”. Irene Mihalic of the Greens said the coalition was “cutting deep into fundamental rights”. The Gesellschaft für Freiheitsrechte, a civil-rights litigation group, has taken Bavaria’s police law to the Constitutional Court.

The Masterportal shows what travels. Hamburg built the open-source map portal because its 2012 transparency law made publishing geodata compulsory and no product on the market fitted. In 2018 five municipal and state bodies formed a partnership to develop it together. By the end of 2025 it had 56 members, from cities and districts to Land and federal agencies, and Dataport, a public IT provider, runs its office.

Civitas Connect does the same for urban data. Founded in Münster in 2020, the association now has more than 50 cities, municipal companies and public bodies as members, and develops CIVITAS/CORE, an open data platform not tied to any vendor. Version 1.0 was finished in April 2024, and version 2.0, paid for mainly by eight cities, was released for production use in October 2026. The community that steers it has grown to 20 members and wants 40 to 50 towns.

A tree-watering map moved for almost nothing. Gieß den Kiez (“water your neighbourhood”) began at CityLAB, Berlin’s public innovation lab, in 2020. Leipzig launched its own version on the same code in April 2021 with €5,000 of local money, and had over 1,300 users by 2023. Logged watering fell from over 170,000 litres in 2023 to 144,624 in 2024, and since 2025 part-time staff paid by a national volunteering foundation have kept it running. Potsdam has a version too.

Lighthouse project

Gieß den Kiez

Berlin’s tree-watering map, copied by Leipzig for €5,000.

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Shared apps show what happens when no one pays to coordinate. The Smart Village App came out of the model project in Linz am Rhein and is used by about 50 municipalities, but no permanent funding for central coordination exists. The Open Smart City App, started by Solingen with Wolfsburg and Remscheid, reached about 25,000 users in Solingen, then split into three main versions as the cities wanted different things. Solingen’s version is now maintained by regio iT, a municipal IT company, for a community of customers.

Across the whole programme, the government counted by June 2024 that towns outside it had adopted one of its solutions 46 times, joined 41 development communities and used a project as a model 224 times. The transfer office’s events had reached 388 of those towns. Connected Urban Twins, in which Hamburg, Munich and Leipzig built digital twins of their cities with about €32m, published its results as open source; who has reused them has not been reported.

Lighthouse project

Connected Urban Twins

Hamburg, Munich and Leipzig’s shared digital-twin project, published as open source.

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One idea moved from a city into federal law. Since 2018 Mannheim has run software from the Fraunhofer institute IOSB that looks for movements such as hitting or falling on 46 of its 70 police cameras. The city paid €860,000 for the cameras and the police €190,000 for workstations and video management, while Fraunhofer funds the software. The police say success cannot be shown in figures; street crime in the area is back at its pre-2018 level, and no independent evaluation has been published. Hamburg switched the approach on in September 2025.

Residents notice the counter more than the code. In the IMD Smart City Index, a survey of how residents experience their city, Hamburg ranks 15th of 148, Munich 19th, Berlin 29th and Hanover 66th. But asked whether processing ID documents online has cut waiting times, residents of all four put their cities among the five lowest of 17 in Germany, France, Spain, the Netherlands and Belgium.

What travelled was what towns owned and paid to maintain together: 60 public bodies steer the Masterportal through an office at Dataport, and Leipzig took Berlin’s tree map for €5,000. One for all from above has so far put one service in nine online everywhere. The federal programme helped by forcing its code into the open, and the Smart Village App came out of it. But no one yet pays to coordinate that app, and the programme is winding down with no successor announced.