Space Law 2024 Comparisons

Legal Framework for Space

The overall picture regarding space activities in and beyond Germany is characterised by:

• the advance of the “NewSpace” economy;
• the increasing competition in the field of launchers, satellites and regarding the race to the Moon;
• a general realisation of the importance of space applications for both, climate (monitoring) and strategic autonomy; and
• an intensifying debate regarding safety, resilience and sustainability questions.

The NewSpace economy is still largely reliant on state and institutional ultimate end users. However, reports from renowned analysts suggest that at least the data-based and satellite-based economy is to a large degree self-sustaining. In addition, European and German national institutions are trying to push the commercialisation of space tech in various sectors through targeted programmes to facilitate the development of a self-sustaining economy.

The international legal framework can, from an EU perspective, be described as follows.

• The traditional areas of international law, where the United Nations Committee on the Peaceful Uses of Outer Space (UN-COUPOS) initiative tries to facilitate an international legal framework regarding topics such as safety, utilisation of space resources, fair participation and sustainability.
• Multinational agreements, particularly the Artemis Accords, which appear to overtake at least some of the international laws in terms of acceptance by signing – the Artemis Accords set forth principles for co-operative civil exploration and face criticism for – allegedly – contravening the Outer Space Treaty (OST) in terms of appropriation of space resources. Germany, although it signed the Artemis Accords on 14 September 2023, issued a statement at the same time affirming that it would nevertheless adhere to international law.
• National space laws, the number of which is increasing. Germany still has no national general space law. While a German space law is reportedly in the making, it cannot be predicted whether a draft will come out during the reign of the current German legislative body, which will end in 2025.
• The 2023 announced EU Space Law (EUSL), which was stalled in April 2024 at the last minute. It has now been announced that a draft EUSL will be subject to legislation procedures in 2025. The EUSL aims to enhance the safety, resilience, and sustainability of space operations. However, critiques question the EU’s authority to enact a harmonised legal framework.

Key Trends

In addition, the following are key trends for the German space sector:

• further technological developments regarding all areas related to technology for space situation awareness, space traffic management, Earth monitoring and space data security as well as regarding launchers, satellites, re-entry methods and space infrastructure;
• increasing competition between launch service providers due to the number of (micro-)launchers coming on-line within the next three years across the EU and worldwide, expected to result in price falls and increasing launch flexibility and – as a result – the start of a consolidation process in the launcher market within the next five years;
• further development of spacetech in the areas of health, agritech and foodtech as well as material sciences;
• the increasing influence of space-specific regulation at both German and EU level in the areas of sustainability, safety and resilience, partly countering the foregoing; and
• tighter connections between space operators in the defence/dual use sector due to the need for security/defence autonomy.

Please refer to the Germany Trends & Developments chapter of this guide for further discussion.

The German space industry has a long history and is known for its capacity for engineering, base research capabilities and technological leadership. Between 2016 and 2020, Germany was ranked fifth world-wide with respect to issuing space-related patent applications, accounting for around 8% of applications globally.

According to data from the German Aerospace Industry Association (Bundesverband der Deutschen Luft- und Raumfahrtindustrie e.V., BDLI), German space-related commercial revenues totalled EUR2.6 billion in 2022. The number of students beginning air and space technology degrees at German technical universities is also noticeable increasing.

Germany’s research institutions for Space and Germany’s space businesses are known for their focus on base research as well as the development and manufacture of components, and complete systems for general space applications such as navigation, earth observation, meteorology, and communications as well as for propulsion technology. The German space industry is one of the most important partners for the development and operation of the European satellite navigation system Galileo. In addition, the German space industry is significantly involved in the development and production of components for the European Earth observation system Copernicus and several of the Sentinel satellites used for this purpose have been integrated by German manufacturers. The German space industry is a partner in the development and operation of the European MetOp and Meteosat weather satellites. It is also a key partner in Alphasat, currently the largest and most powerful telecommunications satellite of the European Space Agency (ESA). In addition, German corporations are involved in the development and production of parts for the Artemis mission and are partners in one of the successors of the International Space Station (ISS).

Besides established companies, the German space industry consists also of a growing number of small and medium-sized enterprises as well as a prolific start-up scene with – in 2023 – the highest number of such endeavours in the EU. These start-ups are often connected to technical universities.

The German government, through the German Space Agency (Deutsches Zentrum für Luft und Raumfahrt, DLR) supports research and commercialisation. Furthermore, German federal states (Bundesländer) have their own space-related grants and programmes. In addition, universities facilitate research projects. Finally, there are four ESA Business Incubation Centres already active in Germany and a number of further acceleration and incubation centres. The landscape for incubation and acceleration is wide and dense.

Regarding launch systems, 2024 has already seen a successful test-start by one of the three bigger German launching start-ups and is expected to see test starts from two German competitors in 2024. There are also plans to establish a mobile launch system in the North Sea so that Germany will, in future, possibly have access to certain orbits from within its exclusive economic zone.

Legislation

The German legal system is based on civil law. Germany currently does not have its own designated “Space Law”, although one has been announced in the German federal government’s National Space Strategies (Raumfahrtstrategien der Bundesregierung) in 2023. However, there is currently no clear view on the timing. The applicable regulations on Space Projects are therefore scattered throughout non-space-specific national laws and international law.

In the absence of any consolidated national space legislation, the regulatory landscape in Germany is patchy:

• spacecrafts, rockets, and similar objects are considered aircraft according to Article 1 paragraph 2 sentence 2 of the German Air Traffic Act (Luftverkehrsgesetz, LuftVG) as long as they are in airspace;
• the use of frequencies and orbital slots for operating satellites is regulated in the Telecommunications Act (Telekommunikationsgesetz, TKG);
• with respect to data security in satellite communication, the Satellite Data Security Act (Satellitendatensicherheitsgesetz) and the Satellite Data Security Regulation (Satellitendatensicherheitsverordnung) are applicable; and
• enterprises that produce goods or technologies intended for use in space flight or for use in space infrastructure systems are subject to the Foreign Trade Regulation (Außenwirtschaftsverordnung, AWV), which may require a permission for foreign investments in these companies.

In addition, the planned EUSL (see 1.1 The “NewSpace” and Space Tech Economy), with its impact on Germany, is expected in 2025.

Case Law

Case law as such plays no role in Germany. The higher and supreme court’s judgements are not binding on lower courts, although they are usually followed.

Germany acts as a regulator with respect to the assignment and licencing of orbits and frequencies, aviation law, rules governing the use of satellite data, the implementation of ratified international laws and treaties and the further specific and generally applicable legislation.

Germany is a participant in space activities through its memberships in the ESA, of which Germany is one of the founding members and the biggest funding contributor in 2024 and, through its participation in the European Union Agency for the Space Program). ESA astronauts are trained partly in Germany and German astronauts have visited the Russian space station MIR and the ISS. Germany actively participates in space exploration (Mars Express and Rosetta Missions) and the Artemis programme.

The German state facilitates space activities by means of funding the ESA and the DLR and through its National Programme for Space and Innovation (Nationales Programm für Weltraum und Innovation, NPWI), which is managed by the DLR. In addition, Germany is a facilitator of international collaboration. Finally, Germany provides infrastructure support for space launches, satellite operations, and research activities and hosts ground stations for communication with satellites in orbit.

Government Agencies Regulating Space

Space activities fall within the overall responsibility of the Federal Ministry for Economic Affairs and Climate Action (Bundesministerium für Wirtschaft und Klimaschutz, BMWK), where the federal government co-ordinator of German aerospace policy is based. The BMWK acts through the DLR.

The DLR is the acting space agency of Germany. The DLR is responsible for preparing German space planning, for implementing German space programmes, as well as representing German space interests in the international area. To achieve these goals, the DLR develops and manages, among others, the NPWI, co-ordinates technology and space-related projects and independently performs functions in the administration of government-funded subsidies.

The DLR employs around 11,000 individuals. It has 55 different institutes and subsidiaries and numerous other test and operating facilities at a total of 30 locations in Germany and four foreign offices. The DLR’s budget for its own research and development work and for operational tasks amounts to an aggregate of more than EUR1.37 billion euros per financial year (all figures are from 2022).

In Germany there is no comprehensive general space law governing space activities. This absence means there is no overall and binding licensing process or system of supervision in place for space activities in general.

The DLR attempts to gather and relay necessary information to the United Nations Office for Outer Space Affairs (UNOOSA), but the above-mentioned legislative gap creates legal uncertainties in various areas.

For certain very specific space activities, however, there are established authorisation frameworks.

• The operation of advanced space-based earth remote sensing satellites requires authorisation from the Federal Office for Economic Affairs and Export Control (BAFA) under Section 3 of the Act on Satellite Data Security Act (SatDSiG).
• The use of frequencies and orbital slots for satellites must be authorised by the Bundesnetzagentur (BNetzA) as per the TKG (further described in 2.5 Role of the State in Co-ordinating the Use of Radio Frequencies and Orbital Slots).
• The LuftVG classifies spacecraft, rockets, and similar objects as aircraft when traversing airspace. Such vehicles are subject to LuftVG regulations and must only take off and land at approved airfields, overseen by the German Aviation Administration (LBA). Although registering space objects with the LBA is voluntary, it is highly recommended in practice because registered objects are typically granted permission to use German airspace.

Radio Frequencies

The use of frequencies is regulated by the TKG. Individuals or entities residing in Germany or having their registered office therein, who want to use frequencies through space objects are subject to the obligations arising from the Constitution and Convention of the International Telecommunication Union (ITU). The Federal Network Agency (Bundesnetzagentur, BNetzA) is responsible for allocating and managing radio frequencies and orbits and co-ordination with the ITU regarding applications from Germany. This includes satellite communications, Earth observation, and navigation systems.

Frequency and Orbital Slot Allocation

The BNetzA carries out the registration, co-ordination, and notification of satellite systems with the ITU upon request and transfers the resulting rights to use frequencies and orbits to the applicant.

The transfer of usage rights requires that frequencies and orbits are available for use, that there is compatibility with other frequency uses and other registrations of satellite systems and that public or third-party interests are not impaired.

The details of the application process are regulated in the Administrative Regulations for the Registration, Coordination and Notification of Satellite Systems (Verwaltungsvorschrift für die Anmeldung, Koordinierung und Notifizierung von Satellitensystemen im deutschen Namen und für die Übertragung der Orbit- und Frequenznutzungsrechte, VVSatSys).

The required procedures include inter alia:

• a submission by the space operator to BNetzA, requesting a filing to the ITU and the initiation of co-ordination proceedings;
• the space operator providing proof regarding availability of funds (for costs of ITU proceedings) and of qualified staff for required assistance;
• provision of further information, including a business and technical plan regarding the use of the allocated orbits and frequencies, also setting out an explanation regarding use and avoidance of infringements; and
• a binding statement regarding compliance with ITU rules. 

Conflict Resolution in Cases of Interference

Space operators must apply to the BNetzA for radio frequency use and orbits as outlined above. The BNetzA registers, co-ordinates, and notifies the ITU of the systems and plans, and assigns the corresponding orbit and frequency usage rights to the applicant.

Moreover, the BNetzA monitors frequency utilisation, as stated in Section 103, paragraph 1 of the TKG. To maintain effective frequency regulation, the BNetzA has the authority to issue orders that restrict or stop the operation of devices if necessary.

The decisions of the BNetzA on the assignment of frequency and orbit rights or on restrictions are issued by way of administrative acts, including decisions on infringements.

Germany currently lacks a dedicated rocket launch site, largely due to its relatively short and densely populated coastline. Launching rockets over the ocean minimises the risk to human populations and infrastructure. In the event of a failure or explosion during the launch, debris is more likely to fall into the sea, reducing the potential for casualties and damage. Therefore, current plans include launching rockets from a floating platform in the North Sea. Test launches are scheduled for 2024. This offshore site is managed by the German Offshore Space Alliance (GOSA) and represents a significant step in the commercial development of Germany’s launch capabilities.

The role of the state in launching space assets has largely been as a legislator (through the applicability of the LuftVG and applicable other general laws, such as the TKG and the Satellite Data Security Act. Further, through its ground stations and through services provided by the DLR and by grants and permits, the role of Germany is also that of a facilitator.

Finally, the German state is also a user of launch services in the sense that, for instance, satellites of the German armed forces, are procured and launched with services from private actors (and in the future potentially with the help of German micro launchers), as are satellites and satellite components for research and meteorological and climate-monitoring missions. 

Space Treaties to Which Germany Is a Party

Germany is a party to the four principal UN space treaties: the OST, the so-called Rescue Agreement (ratified 17 February 1972), the Liability Convention (ratified 18 December 1975), and the Registration Convention (16 October 1979). Germany is not a party to the Moon Agreement.

In addition, Germany is party to the following international treaties and agreements:

• the Treaty Banning Nuclear Weapon Tests in the Atmosphere, in Outer Space and Under Water (1964);
• the Agreement Relating to the International Telecommunications Satellite Organization (INTELSAT) (1973);
• the Convention on the International Mobile Satellite Organization (1979);
• the Convention Relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite (1979);
• the Convention for the Establishment of a European Space Agency (1980);
• the Convention Establishing the European Telecommunications Satellite Organization (EUTELSAT) (1985);
• the Convention for the Establishment of a European Organisation for the Exploitation of Meteorological Satellites (EUMETSAT) (1986);
• the Constitution and Convention of the International Telecommunication Union (1994);
• the International Space Station Intergovernmental Agreement (1998);
• the Cape Town Convention (signed, but not ratified) and Space Protocol (signed, but not yet in force since not ratified by enough countries); and
• the Artemis Accords (signed by Germany on 14 September 2023).

Committee on the Peaceful Uses of Outer Space

Germany is a member of the Committee on the Peaceful Uses of Outer Space (COPUOS). Germany contributes expertise, shares best practices, and collaborates to address key issues such as space debris mitigation and space observation and exploration.

International Law and Private Liability

According to Article 25 of the German Constitution (Grundgesetz, GG), the general rules of international law shall be an integral part of federal law, shall take precedence over other laws and directly create rights and duties for the inhabitants of the federal territory. For certain international treaties, Article 59 paragraph 2 sentence 1 of the GG requires the participation of the Bundesrat and Bundestag in the form of a “treaty law” prior to ratification by Germany. International treaties have been ratified (or not ratified) as outlined above.

In the absence of a national space law, there is no particular legislation addressing the question of liability or the role of private stakeholders in general.

The UN Space Debris Mitigation Guidelines are applicable to Germany, but there is no implementation into national law and so the guidelines are not legally binding. In the absence of a liability regime, the German state will therefore be fully liable in accordance with Article VII of the Outer Space Treaty without clear path for reimbursement from the space operator.

Due Regard

Germany has not adopted a national space law that would define and implement in detail – beyond general obligations from international law – the principle of due regard from international treaties such as the OST and the Liability Convention (1972), to which Germany is a party.

Besides the – to a certain extent – applicable LuftVG. and general applicable law, Germany has no specific space-related laws or legal instruments regarding prevention or indemnification of damage specifically caused by space activities. There are also no specific mandatory insurance requirements for space operators under German law.

However, if space objects are airborne and are therefore considered aircraft under the LuftVG, liability insurance to cover liability for damages due to the death, bodily harm or damage to the health of an individual not carried in the aircraft and the destruction or damage to an item not carried in the aircraft is mandatory according to Section 2 of the Air Traffic Act.

Scope of Coverage and Liability Caps

While there is no specific law dedicated to insurance for space activities, space operators must adhere to general insurance principles outlined in relevant legislation and will in general require:

• first-party asset insurance, covering transfer to launch, launch, vehicle flight, (limited) in-orbit-time (depending on space asset) and commissioning; and
• third-party liability insurance, covering launch liability, in orbit and de-orbit liability, all as resulting from space activities.

Typical exclusions are the results from war, anti-object devices, wilful acts (including interference) and unlawful seizure or control. Third-party liability and loss of revenue are, in certain cases, also excluded, depending on the space asset and insurer in question.

The Space Liability Convention, to which Germany is a party, does not provide for a maximum liability limit. Further, Germany, in the absence of a general national law, does not provide for liability thresholds. As a result, provisions in contractual agreements are the main source of liability thresholds and caps between the parties to such agreements.

Risks and Premiums

The insurance market for space activities is an international one led by only a few insurers (including reinsurers) and international insurance brokers. The insurance market is particular difficult for new space operators with as yet unproven technologies, leading to restrictions on the availability of insurance.

Risks are assessed based on technical factors and commercial/external factors, such as mission criteria, technical complexity, launch vehicle and technical history, redundancy, margins and single point failures, as well as on insured sum, loss criteria and the general market conditions.

It is a specific feature of the space insurance market that each insurer assesses the specific risks based on its own due diligence and data, which suggests inefficiencies in terms of the cost of a typical insurance policy involving a consortium of insurers.

Limitations on Space Activities

The launch of a space object will require the permission of the local aviation authority, since the LuftVG requires the compulsory use of airfields for any “aircraft”, a category which also includes space vehicles, and the establishment of an airfield requires a permit.

Apart from that, general law with its restrictions and requirements applies. There are not yet any laws specifically restricting activities in areas such as healthcare and life sciences, agri-food, mobility, the environment or energy. For instance, remote treatment (telemedicine) is not generally excluded, but the discussions around this topic have not yet focussed on space. These topics are seen as areas where the commercialisation of space technology has a huge potential. For example, when it comes to crop monitoring, precision farming techniques, and environmental monitoring, accuracy of navigation and autonomous vehicles, safety of maritime transport, environmental monitoring and pharmaceutical developments in space.

Data Processing

In Germany, the Act on Satellite Data Security (SatDSiG) was implemented on 1 December 2007. This legislation aims to ensure that earth observation data from high-quality German satellites does not compromise the national security of Germany or its allies. According to the SatDSiG, supplemented by the Satellite Data Security Ordinance (SatDSiV), if a space-based remote sensing system (usually a satellite equipped with remote sensing sensors) is classified as a high-quality system, both the satellite operator and the data supplier must each obtain approval from the German authorities. The Federal Office for Economic Affairs and Export Control (BAFA) serves as the competent authority for granting these approvals. The technical criteria determining which satellites are subject to the SatDSiG are outlined in the SatDSiV. Furthermore, the SatDSiG also governs data providers wishing to distribute earth observation data, requiring them to obtain a licence.

Presently, the SatDSiG’s scope is relatively narrow, affecting only two German satellites, both operated by the DLR. Additionally, the regulation applies to two German data providers: the DLR’s data centre for scientific data use, and Airbus DS Geo GmbH, which has commercial rights to the data.

Cybersecurity

Neither the EU nor Germany have regulations on cybersecurity that specifically relate to space activities. However, there are several general cybersecurity rules that apply to companies active in the space sector and to some products used in space applications.

The NIS 2 Directive (Directive (EU) 2022/2555) aims to achieve a high level of cybersecurity across the EU. It does not apply directly but must be implemented into national law by the member states. The NIS 2 Directive assigns entities to different categories of importance; the more important or critical the entity, the more obligations must be met.

Another relevant cybersecurity regulation at EU level is the Cyber Resilience Act (CRA). It affects entities that bring products or software with a digital component to the EU market. The products must then undergo a conformity assessment. The higher the risk category of the product the higher are the requirements that must be met. 

In Germany, cybersecurity is primarily regulated in the Act on the Federal Office for Information Security (BSIG). In addition, the Federal Office for Information Security (BSI) has published guidelines on cybersecurity to minimise the risk of non-compliance with IT regulations. Published BSI Standards include requirements and recommendations for securing company data and systems, as well as a guide for implementing high IT security and data protection standards. Information security is thus, in general, achieved through a combination of the BSI Standards for establishing an information security management system and the implementation of the IT basic protection modules from the IT-Grundschutz Kompendium. These basic protection modules form the basis for the international ISO 27001 certification. The standard outlines the requirements for assessing and treating information security risks; addressing controls related to the security of data; and ensuring the confidentiality, integrity, and availability of information. Organisations certified under ISO 27001 demonstrate their commitment to robust information security practices and regulatory compliance.

Since Germany has no general space law yet, “non-interference” and “harmful interference” are dealt with on the basis of the OST, other applicable international law and on the basis of various sector-specific laws, in particular the TKG as discussed in 2.5 Role of the State in Co-ordinating the Use of Radio Frequencies and Orbital Slots.

Germany provides for a space objects register as part of the general aircraft register (Luftfahrzeugrolle der Bundesrepublik Deutschland – Band R: Raumfahrzeuge), which is administrated by the German Aviation Authority (Luftfahrtbundesamt, LBA). Commercial space operators can, but are not obliged to, register their objects with the LBA or to disclose any information with respect to their space objects.

Further, Germany, as a member of both the EU and the ESA, is engaged in various EU and ESA measurers, including those pertaining to:

• the ESA Zero Debris Charter (zero debris initiative); and
• ESA Clearspace-1 (removal of space debris).

Space situational awareness (SSA) and space traffic management (STM) are currently the focus of German and European discussions. German space operators participate in SSA initiatives to monitor space objects, including sharing orbital data and informing on and issuing collision avoidance manoeuvres. Germany also co-ordinates with international partners in the realm of STM.

Due to the lack of a specific German space law, space operators’ duties and obligations are based on general laws and the principles foreseen in international treaties and multinational agreements if and to the extent applicable in Germany.

ESG

Germany has no Space specific ESG guidelines (yet). The overall German ESG landscape, however, applies to space activities, introducing ESG guidelines and environmental obligations.

German environmental laws generally apply regarding the impact of any kind of activities on Earth. In particular the German Emission Control Act (Bundesimmissionsschutzverordnung, BImSchV) and other general legislation applies regarding launches, re-entry and in general regarding the environmental impact of the activities.

German entities are, to differing degrees and depending on their size and legal form, expected (but not legally bound) to follow guidelines under the general Corporate Governance Standards (Deutscher Corporate Governance Kodex, CGK). This includes in a wider sense also transparency and conduct.

German national industry initiatives aim to foster environmental goals, in particular the German Space Strategy commitments to sustainability and responsibility, various specific industry initiatives and (for instance) the (self-commitment) of the DLR regarding sustainable behaviour.

Space Debris and Areas of Special Interest

There is no binding space-specific national regulation regarding environmental impact. However, besides the aforementioned principles, German entities are expected (but not bound) to follow best practice by adhering to ISO Standards ISO 24113 – Space Debris Mitigation Systems).

There is no specific law regarding areas of special interest. Protection is provided by participation in international treaties and multinational agreements such as the OST and the Artemis Accords.

Intellectual Property and Space

There are no specific intellectual property rules targeting Space as such in Germany. As a rule, the general German and EU IP protection laws apply also to all space activities; however, their application and enforcement regarding certain space-related question is difficult and not yet fully clarified. 

Outer space, including celestial bodies such as the Moon and Mars, is considered a domain beyond national appropriation as per the OST. This means that no country can claim sovereignty over outer space or celestial bodies, leading to the question of the extrajudicial nature of IP rights in space. 

Given the challenges of enforcing IP rights in space, many space-related projects use contractual agreements to manage IP. These agreements can specify ownership, usage rights, and dispute resolution mechanisms for IP created or used in space activities between the parties. They are not capable, however, of establishing objective rights. Nonetheless, organisations such as the ESA work within frameworks that respect the IP laws of participating countries. In practice, IP protection for space activities is typically managed through a combination of national/regional IP registrations, international treaties, and contractual agreements among collaborating entities.

In Germany, there are currently no national space-specific regulations dealing with property rights in outer space or with respect to extra-terrestrial resources. Any obligations and rights in that regard are only discussed on the basis of the ratified international law, in particular the OST and the Artemis Accords.

Germany has, in the process of signing the Artemis Accords, confirmed that it will follow international law but has not further clarified its position beyond this.

There is no granting authority for resource rights in outer space in Germany and no national law concerning space resources.

Germany has currently no space-specific framework for sustainability. The German Space Strategy, however, outlines commitments to responsible exploration and adherence to international guidelines, ensuring spacecraft design and operations consider environmental impacts.

Germany has not defined any protected zones in outer space, although it follows the international treaties and is a party to the Artemis Accords.

There are no government or legislative initiatives regarding critical space minerals. In recent years, however, the EU and Germany have shown interest in critical space minerals. In particular, the EU Space Strategy highlights the importance of securing access to critical raw materials.

At the national level, Germany has been actively involved in discussions regarding space mineral exploitation and has conducted research on potential lunar resource utilisation.

Climate Change and Space

The main current national initiative addressing climate change in relation to space activities is the German Space Strategy (2023). The German Space Strategy highlights the importance of space activities for the monitoring of the effects of climate change and the implementation of suitable counter measures.

Germany aims to be a leading location for the development and execution of innovative earth monitoring. In particular, the German Space Strategy describes the importance of space activities for questions of climate change as one of the main fields of action for Germany, describing the monitoring and emission measurement in co-operation with the UN Environmental Program (UNEP) and the on-going support of the COPERNICUS programme as key projects.

Sustainable Development Initiatives and Space

The German Space Strategy emphasises sustainable space exploration and the responsible use of space resources. Initiatives focus on reducing the environmental impact of space activities, promoting co-operation, and supporting research into related space technologies, in particular through earth monitoring.

Moreover, both the EU and Germany are actively involved in international collaborations addressing sustainability in space. Efforts include participation in UNEP and adherence to international guidelines for space debris mitigation and environmental protection.

There are no specific tax regulations for space activities. Therefore, the general rules apply.

The jurisdiction of German law does not extend outer space. It remains unclear at the margins, however, where outer space begins. In this respect, both the so-called “Kármán line” at a height of approximately 100-110 km as well as the flight altitude achievable with conventional aircraft could be used as a basis. However, there are no international agreements or conventions in place which would bind Germany on this point. Apparently, neither the courts nor the tax authorities have yet commented on this demarcation question.

Therefore, deliveries (for example of a satellite) or other services in space are generally not subject to German VAT, while sales in German airspace may be.

For income tax purposes, according to general rules, all income earned is subject to German (corporate) income taxation. For an Individual, this is the case if it has its place of residence or habitual residence in Germany. For a company, this is the case if it has its management or its registered office in Germany. Income that was not earned in Germany is also considered and includes income earned in outer space (for details see 6.3 Taxation on Sale or Transfer of Space Assets).

Provided that a Double Taxation Agreement (DTA) modelled on the OECD Model Tax Convention applies, companies that have their management in a foreign treaty state are generally exempt from German (corporate) income taxation. This should also not be different to the extent any flight vehicles transit German airspace. The LuftVG qualifies spacecraft, rockets and similar missiles as aircrafts as long as they are in airspace. This also includes unmanned aerial vehicles, including their control stations, which are not operated for the purposes of sport or leisure activities. Therefore, all of these vehicles should also qualify as aircraft for the purpose of an applicable DTA.

There are no space-specific tax incentives for investors in Germany. However, taxpayers are entitled to claim the research allowance (Forschungszulage) pursuant to the Research Allowance Act (FZulG), to the extent that they are not exempt from taxation.

Eligibility requires the realisation of a favoured research and development project. R&D projects are eligible if they fall into one or more of the categories of basic research, industrial research or experimental development.

The amount of the research allowance is based on the eligible expenditure and equals (currently) 25–35% of the eligible expense. The eligible expenses for R&D projects carried out in-house include the gross wages for employees, insofar as they are employed in a subsidised R&D project, as well as eligible own expenses.

The research allowance applies to an assessment basis of up to EUR15 million. If an R&D project is carried out as contract research by a third party, up to 70% of the agreed remuneration may qualify as eligible expenditure.

The sale or transfer of space assets is generally subject to VAT at a rate of 19%. In principle, a company can deduct the VAT charged on inputs from the VAT payable on outputs. However, as mentioned in 6.1 Tax System for Space Activities, the sale and transfer of assets may be outside the scope of German VAT if carried out in outer space.

All profits realised by a German company are also subject to German corporate income tax at the rate of 15.83% (corporate income tax of 15% plus 5.5% solidarity surcharge thereon). Additionally, trade tax may apply at a rate of approximately 9% to 20%, depending on which municipality levies the tax. Again, this is dependent on the sale and transfer being deemed to have been carried out outside of German airspace, a clear definition of which does not exist yet.

NewSpace

In the past few years, the German NewSpace sector has developed a diverse landscape that extends beyond the production of launchers and satellites.

According to a study conducted in 2020, the 92 dedicated NewSpace companies then in existence had more than 2,900 employees between them and, as early as 2018, estimated aggregate revenue of EUR873 million. The number of start-ups in the space sector (or adjacent deep tech sectors with ties to space) has significantly risen since then and is currently estimated to be above 1,000. Most of them are clustered around the renowned German technical universities.

There are several initiatives underway in Germany aiming to connect the activities of established companies, medium-sized providers, start-ups and State institutions together. Start-up hubs set up at universities and the various existing programmes and activities of the DLR, ESA and other agencies support the rapid growth of the German start-up scene.

Established German space economy players continue to have their internationally recognised technological focus primarily on the development and manufacture of systems and components as well as the provision of satellite services. However, companies that develop new technologies and offer logistics services, including micro-launchers for small satellites, an entirely new generation of satellites and related components, as well as a variety of new solutions for collecting and transmitting data in and from space and analysing such data, are increasingly coming to the fore.

VC and Fundraising

Since 2018, German space tech business start-ups have witnessed a notable spike in equity investments through venture capital, angel, and corporate investors. According to the study referenced above, the cumulative VC investment amount for the top deals in 2020 totalled EUR308 million. Financial backers active in the German NewSpace sector include top-tier funds and smaller VCs, corporate venture capitalists, and angel investors.

VC and family office backing is the most important third-party liquidity source for German space start-ups. Due to the technological quality of German technical universities and the technological level of start-ups around these universities, there is a steady and – against the overall trend – good level of interest from VC funds in German space start-ups. Financing rounds for German space startups made up two of the three highest valuations in EU in 2023.

(Alleged) challenges often criticised by VC investors regarding the German VC landscape and possibly hindering a better “ranking” for VC interest in Europe include the lack of dedicated national space legislation (leading to uncertainties), the relative complexity of general compliance and the lack of clear goals of the German Space Strategy.

Space activities in Germany are publicly as well as privately funded.

The German State supports the space industry through several initiatives, for instance, the NPWI. Funding through the NPWI is available for companies, universities, and non-university research institutions. In addition, the state supports space enterprises via the DLR Project Management Agency. In 2023, the DLR Project Management Agency administrated a funding volume of around EUR2 billion, for more than 14,500 funding projects.

Space businesses in Germany are also privately funded. The total sum of equity investments in German NewSpace companies from 2019 to 2021 amounted to EUR881 million. Most of the private investments comes from VC funding (including angel investments) and from family offices. Private investors in Germany are mostly overall tech investors or specialised air, space and defence investors, with a rising tendency of sector-agnostic investors participating.

An alternative way of financing, often discussed, could be the use of crypto-assets. Usage cases could be:

• as security (instead of usual shares) – this creates the possibility of crowdfunding for seed stages, allowing worldwide participation and tapping into a new and wider source of investors;
• for digitised assets such as tangible fixed assets/products, IP or parts of any such assets or future outcomes; and
• for digital assets as such (stable coins, asset backed tokens, cryptocurrency) – this could tap into the interest of enthusiastic supporters as well as into professional or institutional investors.

Technological quality, industry experience, a strong and well-educated workforce as well as political stability and a perceived attractive German and EU market are assets that attract investment in space activities in Germany.

The investment in space activities is seen as part of the deep tech investment landscape, with a view to being part of advanced technological enterprises with potentially multiple profit effects. Macro effects such as the current discussion around security autonomy, the obvious importance of space data for climate change, and the apparent race to return to the Moon provide additional confidence that the space sector will develop sustainably and that interest is not just hype. 

In Germany, foreign investments in domestic companies are regulated by the state under the Foreign Trade and Payments Act (AWG) and the Foreign Trade and Payments Regulation (AWV). The Federal Ministry for Economic Affairs and Climate Action (BMWK) is empowered to scrutinise acquisitions and investments by foreign entities. There are two primary methods of screening: cross-sectoral and sector-specific.

Cross-sectoral screening applies to acquisitions and investments in German companies by non-EU investors, regardless of the industry sectors involved. This screening has thresholds set at 10% and 20% for particularly security-sensitive areas and 25% for other areas in terms of controlled voting rights. Although not all foreign investments undergo automatic scrutiny, there is a mandatory reporting requirement for areas such as satellite operations and companies engaged in aerospace goods or technologies. A specific approval by the BMWK is required in these cases.

Sector-specific screening targets companies involved in military technology manufacturing, sales, or usage. It also includes investments from EU member states exceeding a 10% voting rights threshold. Transactions may be restricted or prohibited if they threaten Germany’s essential security interests. For instance, in December 2020, the BMWK blocked the acquisition of German firm IMST GmbH by the China Aerospace Science and Industry Corporation. The BMWK cited concerns over losing technological sovereignty, noting IMST’s 25-year involvement in commercial radio technology as a factor in its decision.

Most small and medium-sized companies in the NewSpace sector are not listed on the stock exchanges in Germany.

The forgoing is also true for debt security market instruments such as bonds. This appears to be an omission since the ability to provide for a listed investment may open the door for investors that are obliged to invest in listed securities.

In addition, further pursuit of, for instance, the Cape Town Protocol on Space Assets or similar initiatives with the aim of allowing a standard of collateral for space assets to establish itself or the development of the tokenisation market for space assets (see 7.2 Finance Sources for Space Activities) could add a further way of structuring third-party financing.