Germany's Rail Funding is Off Track

Executive Summary

Germany’s rail funding is off track. A maze of responsibilities involving the federal government, the Deutsche Bahn AG (DB) and its infrastructure subsidiary DB InfraGO has produced a financing architecture that is opaque, distortionary and expensive for users. The federal “special fund” adds much-needed investment, but the core problems in the financing architecture remain unresolved. 

Track access charges are inflated by a “full cost” model. Unlike many European countries, Germany charges mark-ups for capital depreciation and a return in addition to the immediate cost of train operation. As a result, track charges are among the highest in Europe and have risen steeply – especially in 2025 –, hurting the competitiveness of both passenger and freight transport. 

A circular money loop wastes public funds. Since 2024 the federal government has replaced regular subsidies with an equity injection for the DB to fix its own budget. As equity injections demand returns, access charges have spiked as a result. Ultimately, as the DB is state-owned, the returns flow back to the state as dividends. The effect is to put a levy on rail operation and then recycle the proceeds rather than fund the infrastructure directly and transparently. This setup creates an incentive to neglect maintenance and shift it onto the state’s balance sheet, who will pay for rail replacement. Ongoing litigation over the adequate rate of return illustrates the bizarre effects of operating a public infrastructure with the requirement of extracting a profit. 

The present setup blurs accountability and raises costs. Responsibilities for investments, maintenance and operations are split and rerouted through complex contracts, while users shoulder full costs through track charges. Internationally, countries like Austria and Switzerland finance rail more directly from public budgets, keeping access charges closer to marginal costs. 

Policy recommendations

1. Reduce or abolish the profit claim on the public rail infrastructure. Treating rail infrastructure as a public good that does not need to deliver a return would immediately lower the mark-ups embedded in access charges and remove incentives that siphon operating revenues away from maintenance.  
2. Switch from the full cost model to marginal cost. Set access charges to cover the direct costs of train operation and fund the required investment from the budget. This would stabilize prices, improve transparency and support strategic planning. 
3. Make financing transparent and purpose-driven, with clear governance. Consolidate funding streams into two pillars: user revenues and explicit public subsidies tied to policy goals. Align InfraGO’s mandate, indicators and processes with public interest outcomes. A railway infrastructure fund can effectively organize funding flows.