How to Make Inter‑Municipal Co‑operation Work

2. How to implement effective inter-municipal co-operation: setting the right policy frameworks

Abstract

This chapter examines how governments can establish effective legal, institutional and fiscal frameworks to support sustainable inter-municipal co-operation. It identifies three mutually reinforcing pillars that underpin effective inter-municipal co-operation: legal frameworks that provide clarity and flexibility for co-operation; institutional frameworks that align responsibilities, governance structures and functional territories; and fiscal frameworks that ensure financial sustainability, equitable cost-sharing and appropriate incentives.

The chapter also highlights the importance of balanced governance arrangements, democratic accountability, citizen participation, reliable data systems and monitoring mechanisms as enabling conditions that foster trust, transparency, administrative capacity and long-term collaboration among municipalities.

Drawing on OECD country experiences, the chapter concludes with practical recommendations for policymakers on how to design supportive frameworks that encourage effective municipal co-operation while preserving local autonomy, improving service delivery and strengthening territorial resilience.

2.1. Introduction

Inter-municipal co-operation has become an important instrument for addressing the scale and complexity of modern local governance. It offers a flexible framework for municipalities to work across administrative boundaries and respond to shared challenges. However, experience shows that its scope and effectiveness can vary, and that it may remain underutilised in practice.

Realising its full potential requires supportive legal, institutional and fiscal arrangements that facilitate collaboration, align incentives and mitigate risks. Inter-municipal co-operation does not emerge spontaneously; it depends on a policy environment that provides clarity, stability and appropriate incentives. Differences in outcomes across countries and sectors largely reflect how co-operation is designed, implemented and monitored.

The following chapter examines how governments can develop an enabling policy framework that ensures that inter-municipal co-operation operates effectively and sustainably. It analyses how legal, institutional and fiscal frameworks – together with these enabling conditions – can be designed and combined to support effective and sustainable inter-municipal co-operation.

This policy framework rests on three interdependent pillars: a legal framework that defines rights, responsibilities and modalities for co-operation; an institutional framework that organises governance, co-ordination and administrative capacity; and a fiscal framework that ensures financial viability, fair cost-sharing and incentives that encourage collaboration (Figure 2.1). These pillars are mutually reinforcing. Legal clarity without adequate financing limits sustainability, fiscal incentives without sound governance can weaken accountability, and institutional arrangements without a solid legal basis may deter participation. An integrated approach balancing these dimensions is therefore essential to ensure both effectiveness and durability.

Beyond these core pillars, successful inter-municipal co-operation also depends on a set of practical enabling conditions that support collaboration in practice. These key prerequisites that allow municipalities to move from informal agreements to effective joint action include a balanced representation and dialogue among municipal leaders, democratic accountability and citizen engagement, as well as comparable data, monitoring and evidence-based decision making.

Figure 2.1. Core pillars of an effective inter-municipal co-operation policy framework

Source: OECD elaboration.

2.2. Enabling conditions for inter-municipal co-operation

Effective co-operation relies on strong political leadership, mutual trust and sustained dialogue among municipalities, as well as meaningful engagement with citizens and stakeholders. Less tangible factors, including shared administrative cultures, interpersonal relationships and a sense of common purpose, are equally critical in reducing transaction costs and sustaining collaboration over time. Finally, robust data systems, along with monitoring and evaluation mechanisms, are essential to support evidence-based decision making, enhance transparency and ensure accountability.

Ensuring a balanced representation and dialogue among municipal leaders

Well-designed governance arrangements are a key prerequisite for effective inter-municipal co-operation. Co-operation structures – such as joint committees, councils or boards – must balance the interests of both small and large members, including through weighted voting systems, rotating presidencies, or joint management committees. Clear decision making rules and transparent financial procedures help build legitimacy and trust among partners. OECD evidence shows that representation imbalances can undermine co-operation when smaller municipalities feel excluded from decision making or when larger ones dominate agenda-setting. OECD evidence shows that representation imbalances can undermine co-operation, while inclusive governance frameworks help foster commitment and shared ownership. In France, for instance, the governance rules of EPCIs establish a system combining proportional representation and safeguards for smaller municipalities. Seats in inter-municipal councils are allocated broadly in proportion to population, while each commune is guaranteed at least one seat, and no single municipality can hold more than half of the seats. This system allows for proportionality while preventing over-concentration of power (article L. 5211-6-1 of the Code general des collectivités territoriales).

Trust, political leadership and sustained dialogue are fundamental prerequisites for inter-municipal co-operation. Regular exchanges between municipal leaders help align priorities, clarify expectations and prevent conflicts. Experience across OECD countries shows that co-operation is most effective where municipalities share a history of collaboration, stable and committed leadership and a sense of belonging to a common functional territory. For example, in Bulgaria, inter-municipal co-operation was most effective in regions where municipalities had already established informal partnerships and political consensus, demonstrating that mutual trust and local initiative are often the decisive factors in making co-operation work in practice (OECD, 2021[1]).

Gradual and supported implementation is another key prerequisite for building durable co-operation. Trust does not emerge automatically and requires incremental, inclusive processes that demonstrate tangible benefits over time. Starting with limited forms of co-operation and expanding progressively helps reduce perceived risks and strengthen commitment. External support tools – such as EU territorial instruments or shared service centres – can further facilitate collaboration by providing financial incentives, technical support and opportunities for joint action. For instance, the EU supports inter-municipal co-operation in cross-border regions through the Interreg programmes and dedicated cross-border governance bodies such as European Groupings of Territorial Co-operation (OECD, 2024[2]).

Shared Services Centres are another innovative model of co-operation where municipalities share the human and technical resources needed for their operation, which helps reducing municipalities’ administrative and staff costs. For instance, four centres have been established in the Banská Bystrica region in the Slovak Republic (OECD, 2025[3]).

Promoting democratic accountability and citizen engagement

Strengthening transparency and accountability is a key prerequisite for the legitimacy and effectiveness of inter-municipal co-operation. Because decision making is shared across multiple municipalities and governance layers, inter-municipal arrangements can be less visible to councillors, citizens and stakeholders, potentially undermining trust. In particular, inter-municipal co-operation can suffer from the perception that it deals with “technical” issues beyond ordinary citizens’ understanding, and the image of an “insider” intercommunal environment where decisions are negotiated away from public scrutiny (Assemblée des Communautés de France, 2019[4]). In some contexts, co-operation bodies are perceived as dealing with technical issues beyond public understanding or as operating in “closed” environments where decisions are negotiated with limited scrutiny.

Clear oversight mechanisms and accessible information are essential prerequisites to ensure accountability. Municipal councils must be able to effectively monitor inter-municipal bodies through timely, structured and transparent information. Strengthening reporting practices, clarifying responsibilities and improving the accessibility of information can enhance scrutiny and reduce the risk of opaque decision making. In the Netherlands, for instance, research shows that municipal councils often struggle to oversee inter-municipal bodies because information is fragmented, highly technical, or provided too late, limiting their ability to scrutinise their actions (Veenendaal, 2023[5]). Ensuring clear and regular communication on objectives, costs and outcomes is therefore essential to maintain political and public support.

Citizen engagement and participatory tools are critical prerequisites for building trust and democratic legitimacy. Institutional mechanisms, including consultative bodies, citizen panels or participatory processes, provide channels for public involvement, while digital platforms and open-data initiatives enable citizens to access information and follow decision making. For example, in France, the conseils de développement within EPCI offer a formal space for civil-society input and consultation on joint strategies, while other participatory tools have been developed (Box 2.1). Similar approaches exist in Portugal’s Comunidades Intermunicipais and in several Nordic countries, where shared-service regions use citizen panels and online consultations to inform planning.

Combining transparency and participation tools creates a reinforcing ecosystem that strengthens trust in inter-municipal co-operation. Open data enhances traceability and accountability, while participatory mechanisms foster dialogue and shared ownership of decisions. Together, these approaches help bridge the gap between inter-municipal institutions and citizens, ensuring that co-operation is not only effective but also legitimate and responsive to local needs.

Box 2.1. Examples of tools to enhance transparency for citizens and democratic accountability in France

France’s inter-municipal co-operation bodies use diverse tools that aim to foster transparency and accountability through institutionalised and initiative-based stakeholders’ participation:

• Institutional mechanisms: all inter-municipal co-operation bodies (EPCI) with more than 50 000 inhabitants must have a development council (conseils de développement) by law. The development council is a participatory body created at the level of an inter-municipal co-operation body or project area. As an advisory body composed of citizens, economic and social stakeholders, it provides a forum for dialogue between local elected representatives and residents, enabling the development of inter-municipal citizen participation and the collection and discussion of proposals on public policies in the area.

• Open-data initiatives: the Metropole de Lyon (Grand Lyon) has implemented a large-scale open data portal (DataGrandLyon) covering thematic datasets (e.g. economy, culture, education, environment, administration, population, health, sport, infrastructure, transport, housing). The data are accessible at the municipal and intermunicipal levels and adapted to different types of users (i.e. beginners, producers, users), thus promoting transparency and accountability.

• Digital platforms and participatory budgeting: Nantes Metropole has established the Dialogue Citoyen platform, hosting consultations (online or through workshops) to promote the participation of citizens in inter-municipal co-operation public policies or projects. The Metropole has also developed publicly accessible evaluation reports. In addition, it has a participatory budget and a Metropolitan Citizenship Pact that aim to formalise citizen participation and feedback.

• Intercommunalités de France also published a guide to reinforce inter-municipal co-operation concertation with citizens, detailing the preliminary questions to consider, the three main stages of the process (preparation, implementation, and feedback), approaches and methods to diversify participant profiles or engage young people (e.g. through random selection or by reaching “captive audiences” such as schools). It also addresses the presence of elected officials, the layout of meeting space, the use of digital tools, the evaluation of the process, potential challenges to anticipate, and the necessary resources and organisational arrangements (e.g. whether to use an external service provider or manage the process internally) (Assemblée des Communautés de France, 2019[4]).

Source: OECD elaboration.

Enhancing data, monitoring and evidence-based decision making

Access to reliable and comparable data is a key prerequisite for effective inter-municipal co-operation. Municipalities need accurate information on service costs, usage, infrastructure and human resources to make informed decisions about whether and how to co-operate. Data at the scale of functional areas (e.g. on municipal service usage, accessibility and quality) are particularly important, as they better reflect real service needs and territorial dynamics than administrative boundaries (Box 2.2) (OECD, 2020[6]). Such evidence underpins feasibility studies, cost-benefit analyses and the design of appropriate co-operation models, including fair cost-sharing arrangements. It also underpins joint strategic planning, helping to align inter-municipal initiatives with medium- and long-term goals, and is essential for establishing realistic performance metrics, monitoring shared services provision progress, and making necessary adjustments (OECD, 2024[7]).

Box 2.2. The definition of functional and inter-municipal co-operation areas

Across OECD countries, countries define catchment areas for different services which may differ depending on their aim:

• For planning, administrative or planning areas with stable boundaries that assign population within a territory based on residence. This includes regional health authorities (e.g. territoires de santé in France) or school districts.

• For accessibility assessment, Geographic Information Systems (GIS)-based models that quantify spatial coverage, travel times, and catchment areas are well-suited for identifying broad territorial disparities and produce map-based outputs that can be aligned with administrative boundaries.

• For performance comparisons, demand forecasting and service network design, utilisation-based catchments that rely on actual usage from user flows (e.g. students, patients) instead of potential demand (e.g. population of a certain age range in the catchment area of a facility) are best suited for performance comparisons, demand forecasting and hospital network design.

• Countries have also combined different methods for more realistic assessments, e.g. using more sophisticated definitions that combine actual travel patterns and user choice patterns.

Besides these multiple definitions, the size of catchment areas can vary according to several factors, including scale economies, the technological complexity and capital-intensity of the service, whether it can potentially be provided digitally.

With these many different approaches and methods, the question becomes: do countries make compatible multiple catchment areas for the definition of Inter-Municipal Co-operation areas?

Some OECD countries have moved towards defining “functional territories” where catchment areas and local government co-operation increasingly overlap. Moreover, countries consider “user pathways” in the design of overlapping catchment areas to assign joint responsibilities, i.e. in the case of health care, the design may be jointly done for primary, hospital, and elderly care. For instance:

• In France health planning defines Groupements Hospitaliers de Territoire (GHTs), which are designed to align with commuting zones and inter-municipal groupings (e.g. communautés de communes or d’agglomération).

• The Netherlands uses an advanced version of networked governance, where areas are not fix nor uniquely assigned to administrative areas but rather emerge from overlapping functional regions that may be linked through e.g. user pathways. Joint arrangements between municipalities (gemeenschappelijke regelingen), in turn, formalise responsibilities.

While the alignment of functional service areas with inter-municipal co-operation areas is clearly desirable, many countries struggle to achieve it because besides technical expertise, it requires the integration of multiple data sources, which in turn requires appropriate institutional, legal, and political frameworks. In practice, data are often held by different agencies or ministries with limited incentives to share them, while privacy regulations may restrict access to granular user-level information. As a result, data are available at mismatched spatial scales or timeframes, undermining the quality of functional area definitions. Strengthening data infrastructure and governance frameworks is therefore essential to ensure access to timely, granular, and high-quality data for defining appropriate geographies for inter-municipal co-operation.

Source: OECD elaboration.

Standardised data systems and robust information infrastructures are essential prerequisites to ensure transparency, comparability and informed decision making. Many OECD countries face persistent gaps in data availability, particularly regarding service costs, usage and performance indicators. Addressing these gaps requires modern IT systems, harmonised accounting standards and adequate staff capacity to link and integrate data. Some countries have developed efficient national reporting systems such as Municipal Data Program in Finland, Kostra in Norway and Kolada in Sweden, allowing systematic monitoring and benchmarking of municipal performance. These examples highlight that without reliable data infrastructure, co-operation arrangements may remain opaque and struggle to gain legitimacy among citizens and stakeholders (Box 2.3).

Box 2.3. Municipal data on service costs and use in Nordic countries

In Finland, the Municipal Data Program (Kuntatieto-ohjelma) seeks to standardise and automate municipal financial reporting while building a comprehensive database on service costs. It introduced reporting standards and guidelines, training for municipal staff, and IT infrastructure to support data collection and processing. The Aura Handbook (Aura-käsikirja), managed by the Ministry of Finance, provides detailed instructions for automated reporting. The Association of Municipalities (Kuntaliitto) has also played a key role, promoting high-quality reporting through voluntary inter-municipal comparisons.

In Norway, Kostra (Kommune-State-Reporting) managed by Statistics Norway, harmonises the reporting of financial and non-financial data for municipalities and counties. Covering around 95 municipal functions - including education, healthcare, transport, infrastructure, waste, and water - KOSTRA provides a unified platform that enables systematic comparison and analysis across jurisdictions.

In Sweden, Kolada (Kommun-och Landstingsdatabasen) serves as the national database for comparable data on demographics, finances, service costs, and performance indicators at municipal and regional levels. Managed by the Swedish Association of Local Authorities and Regions (SKR), it collects and disseminates information on healthcare, education, culture, infrastructure, and other services, enabling benchmarking and performance monitoring across municipalities and regions.

Source: (OECD, 2024[7]).

Monitoring and evaluation mechanisms are critical prerequisites to ensure performance, learning and accountability. Regular assessment of inter-municipal arrangements helps verify whether objectives are met, identify inefficiencies and support continuous improvement. Effective evaluation combines quantitative indicators – such as costs, outputs and service outcomes – with qualitative insights, including stakeholder and citizen feedback. Several OECD countries have introduced dedicated frameworks to support this process. In France, the national base on inter-municipal co-operation BANATIC, managed by the Ministry of Interior (DGCL) tracks fiscal, investment, and governance data for all inter-municipal groupings, supporting benchmarking and transparency. The French association of EPCI also regularly publishes studies and data on inter-municipal co-operation, for example, the “Étude quinquennale économique 2022”, which covers performance-related topics in inter-municipal co-operation (Intercommunalités de France, 2022[8]). In federal countries, such audits and evaluations of inter-communal bodies are conducted at the state level. For example, in Saxony (Germany), the Servicestelle Interkommunale Zusammenarbeit carried out a comprehensive assessment of inter-municipal co-operation, analysing the governance, cost efficiency, effectiveness and challenges of existing co-operation bodies. The study provided valuable evidence to inform future reforms and support municipalities in improving the performance of their joint arrangements (SSG Sachsen, 2022[9]).

Embedding data, monitoring and evaluation into governance frameworks strengthens accountability and enables evidence-based co-operation. Open data, shared indicators and regular reporting allow municipalities to benchmark performance, justify resource allocation and demonstrate results. By building a shared evidence base, municipalities can move towards more data-driven decision making, enhancing both the effectiveness and the legitimacy of inter-municipal co-operation.

OECD recommendations for setting supportive framework conditions for inter-municipal co-operation

Drawing on OECD analysis and country experience, a set of practical recommendations emerges for creating an enabling environment for effective inter-municipal co-operation. The recommendations below synthesise these key prerequisites based on governance quality, trust, transparency, data and accountability mechanisms.

Key recommendations for setting supportive framework conditions for effective inter-municipal co-operation

• Ensure balanced governance structures that combine fair representation for all municipalities with proportional influence (e.g. weighted voting, safeguards for smaller members).

• Promote strong political leadership and regular dialogue among municipal leaders to align priorities and prevent conflicts.

• Build trust through gradual implementation, starting with limited co-operation and scaling up over time.

• Strengthen oversight and accountability mechanisms, ensuring municipal councils can effectively monitor inter-municipal bodies.

• Enhance transparency and communication through regular reporting on objectives, costs and results of inter-municipal co-operation.

• Engage citizens and stakeholders via participatory tools (e.g. consultations, citizen panels, open data platforms) to build trust and increase democratic legitimacy.

• Develop robust and standardised data systems to support comparability, planning and informed decision making on inter-municipal co-operation.

• Implement monitoring and evaluation frameworks combining quantitative and qualitative indicators to track performance and improve co-operation over time.

2.3. Setting an enabling legal framework

A well-designed legal framework is a cornerstone of effective inter-municipal co-operation. It should provide municipalities with clarity, legal certainty and confidence to collaborate, while preserving enough flexibility to adapt arrangements to diverse local contexts and evolving service needs. Such a framework needs to define clear rules, roles and responsibilities, ensure a balance between autonomy and oversight, and offer a range of co-operation models. It should also support gradual implementation through experimentation and learning, enabling municipalities to scale up successful approaches.

A constitutional basis for inter-municipal co-operation can offer a solid foundation, but it is not an obligation

Providing an explicit constitutional basis for inter-municipal co-operation can offer a solid legal foundation. According to the Country Snapshots, around 20% have such a basis for the right of municipalities to associate. This includes countries such as Bulgaria, Chile, Colombia (for metropolitan areas), Estonia, Hungary, Poland, Portugal (for metropolitan areas), and the Slovak Republic, but also several federal states like Austria, and Mexico. In other federal countries, inter-municipal co-operation may be mentioned in states’ constitutions, for example, in Switzerland (cantonal constitutions). In most cases, the Constitution do not specify the forms or institutional arrangements for inter-municipal co-operation.

In the majority of OECD countries, a constitutional basis for inter-municipal co-operation is absent. In many Nordic countries, for example, the Constitution guarantees local self-government but does not regulate inter-municipal co-operation (Denmark, Finland, Iceland, Norway, and Sweden). What is most important is that Constitutions protect municipal autonomy, including the right to manage local affairs and organise their administration (Venice Commission, 2016[10]). While no international standard requires inter-municipal co-operation to be embedded in national (or state) constitutions, constitutional provisions, particularly those concerning municipal autonomy, should not hinder municipalities from entering into formal co-operation arrangements, since autonomy inherently includes the right to associate. The European Charter of Local Self-Government makes this explicit by recognising both local autonomy and the right of local authorities to co‑operate and form associations to carry out tasks of common interest (Council of Europe, 1985[11]).

While the principle of municipal autonomy implies the right to associate, it also implies the right not to associate. Inter-municipal co-operation should therefore be primarily voluntary. When co-operation is made mandatory, whether for specific services or in highly fragmented systems with very small municipalities, the tasks, governance arrangements and conditions must be precisely defined in law, and municipalities must retain representation in the joint bodies. This helps prevent inter-municipal co-operation from becoming “mergers by stealth” and safeguards local political accountability.

Consolidating legal provisions on inter-municipal co-operation in a unified framework

Clear and coherent legal frameworks are a key enabler of effective inter-municipal co-operation. International experience shows that well-functioning systems rely on statutory frameworks that provide legal certainty, predictable rules and incentives for collaboration (OECD, 2019[12]; CoE Congress of Local and Region Authorities, 2007[13]). These frameworks help municipalities understand how to co-operate, reduce administrative burden and create a stable foundation for long-term co-operation.

By contrast, fragmented legal frameworks can hinder the development and effectiveness of inter-municipal co-operation. When provisions are dispersed across multiple laws and sectors, municipalities may face legal uncertainty, increased administrative complexity and difficulties in designing and implementing co-operation arrangements. This is the case, for example, in Lithuania, where, while the Law on Local Self-Government does not specifically cover rules for municipalities working together, the guidance they need is instead spread out across of more than ten different general and sectoral laws (OECD, 2024[7]). Another example is Romania, where the fragmentation of legal provisions for inter-municipal co-operation issues has been highlighted as a major obstacle to effective co-operation (OECD, 2025[14]). In Norway, an important local government reform took place in 2018 to modernise and clarify the legal framework related to inter-municipal co-operation. Before the reform, the system was fragmented and partly outdated. The reform therefore aimed to simplify and standardise co-operation models, introduce clear legal categories (Chapters 18, 19, 20) and ensure more transparency, accountability, and governance clarity. This new legal framework has, however, also given rise to new challenges and is currently under review by a Municipal Commission appointed in 2025. This ongoing process reflects the need to periodically reassess the regulatory framework in light of evolving institutional and capacity constraints (Government of Norway, 2026[15]; KS, 2025[16]).

The degree of coherence of legal frameworks varies significantly across countries. In most OECD countries, inter-municipal co-operation provisions are consolidated within a single overarching legal act – typically the Local Government Act – which provides a clear reference point for municipalities. This approach facilitates implementation by offering a unified and transparent legal basis. For instance, Finland’s LGA establishes a unified and transparent legal basis that facilitates intermunicipal partnerships and promotes their institutionalisation. A full chapter 8 of the Municipal Act, comprising 15 articles, is dedicated to inter-municipal co-operation. In France, too, inter-municipal co-operation is regulated into one comprehensive legal basis, the Code général des collectivités territoriales (Livre II of the fifth part, Article L5210-1 to L5224-1). In federal and quasi-federal countries, they are defined by State LGAs or municipal codes (Australia, Austria, Belgium, Canada, Germany, etc.).

This core framework can be complemented by dedicated legislation on inter-municipal co-operation or sector-specific laws, which further clarify arrangements and expand available tools. This is the case, for example, in Portugal (Law on Inter-municipal entities), Peru (law on Mancomunidades) or in the Netherlands. In the latter, while the Municipal Act (Gemeentewet) enables municipalities to co‑operate with other municipalities, it is complemented by the “Joint Regulations Act” (Wet Gemeenschappelijke Regelingen or WGR Act) which regroups all public forms of co-operation allowing municipalities (as well as provinces and water boards) to co‑operate voluntarily to deliver shared services or co‑ordinate strategic planning and establish joint entities.

Defining clear but flexible inter-municipal co-operation forms

Effective legal frameworks for inter-municipal co-operation should combine clarity and flexibility, i.e. defining core rules and options for inter-municipal co-operation while allowing municipalities to choose arrangements that best fit their local context.

Legal frameworks should provide a range of co-operation options to enable effective and durable inter-municipal co-operation. Rather than prescribing a single model, effective legal frameworks provide several possible forms, ranging from contractual arrangements to more institutionalised entities (Figure 1.5). When rules are clear and coherent, municipalities are better equipped to establish joint structures, allocate responsibilities and select co-operation models adapted to their needs. By contrast, fragmented or weak frameworks provide insufficient guidance, creating legal uncertainty and undermining the durability of co-operation.

Legal frameworks should clearly define the key elements of inter-municipal co-operation. This includes, for each of the inter-municipal co-operation form available, the legal basis for co-operation, the delegation of competences, and procedures for creating, managing and dissolving co-operation arrangements. They should also set out governance and accountability rules, as well as dispute resolution procedures. Providing these core elements within a coherent framework reduces uncertainty, facilitates implementation and supports sustainable collaboration (Council of Europe, 2010[17]).

OECD countries illustrate different balances between structure and flexibility in legal frameworks. Country experiences show varying approaches to balancing legal clarity and local flexibility (Table 2.1). Nordic countries such as Finland provide enabling frameworks that define key forms and principles while allowing municipalities wide discretion to design co-operation. The Netherlands follows a similar model, combining clear national rules with operational flexibility under the Joint Regulations Act. In contrast, France adopts a more structured system, under which local authorities administer themselves “under the conditions provided for by law” (Article 72 of the Constitution). The system comprises predefined categories of inter-municipal entities, each with specific levels of integration and progressively broader competences, ensuring coherence and legal certainty. Within this system, municipalities still retain some flexibility – for example by transferring optional competences, defining “community interest” to preserve subsidiarity, or using shared service arrangements. However, this highly regulated framework sometimes limits adaptability (Sénat, 2025[18]).

Table 2.1. Examples of legislation on inter-municipal co-operation

	Finland		Netherlands	France
Constitutional status of inter-municipal co-operation		The right of self-administration is stipulated under Section 121 of the Constitution, under which may be derived the right of municipalities to associate.	The right of self-administration is stipulated under Article 124 of the Constitution, under which may be derived the right of municipalities to associate.	The right of self-administration is stipulated under Article 72 of the Constitution, under which may be derived the right of municipalities to associate.
Main legal regulation & articles related to inter-municipal co-operation		2015 Municipal Act Chapter 8 of the Municipal Act (article 49 to 64).	Joint Regulations Act (WGR Act) All the WGR Act (article 1 to 141).	General Law on Local Governments (Code général des collectivités territoriales, CGCT) Article L5210-1 to L5224-1 of the CGCT.
Level of legal regulation of inter-municipal co-operation		Moderately regulated. The Municipal Act provides a general framework for the different types of inter-municipal co-operation.	Moderately regulated. The Act provides a general framework for shared services provision, but municipalities can determine their organisation and operations by agreements.	Highly regulated by law. The law defines structured categories of inter-municipal bodies with graduated levels of integration and competences, ensuring legal certainty while allowing limited flexibility.
Scope of shared services provision description		Forms of inter-municipal co-operation Joint decision making bodies Joint public posts Joint municipal authorities Agreements Founding Charter / agreement Executive and administrative bodies of inter-municipal co-operation Monitoring and audit Withdrawal and resolution of disputes.	Arrangements between municipalities, provinces and water authorities, of which general rules, organisation and composition of shared services provision bodies.	General rules Organisation and functioning (incl. competences) Creation of inter-municipal co-operation Executive and administrative bodies of inter-municipal co-operation Mandates of council members Modification of status Financing of shared services provision (incl. tax powers) Transformation and mergers of inter-municipal co-operation Departmental commission of inter-municipal co-operation Citizenship participation Others.

Source: OECD (2024[7]).

Among these key elements, strong oversight and accountability mechanisms are essential for legitimacy and financial soundness. Beyond defining forms, effective frameworks must ensure robust oversight and accountability. Where inter-municipal entities have legal personality and manage public services, clear supervision is essential to guarantee transparency and compliance. The Council of Europe underscores that inter-municipal co-operation bodies must remain accountable both upwards (through legal and financial oversight) and downwards (to the municipal councils that delegate functions) (Council of Europe, 2010[17]). For example, Iceland’s co-owned agencies (byggðasamlög) must comply with the Administrative Procedures Act, which ensures due process and accountability for decisions taken by these public-law entities. This is particularly important because co-owned agencies manage essential services like fire protection and waste management, where unclear oversight could expose municipalities to legal and financial risks. Similarly, Spain’s consorcios and mancomunidades, both public-law bodies, must be approved and monitored by the Autonomous Communities, ensuring compliance with statutory standards, budget rules and transparency obligations.

Additionally, clear rules on disputes and exit conditions enhance stability and resilience of co-operation. Legal frameworks should also include provisions to manage risks and ensure stability over time. Clear rules on withdrawal, financial obligations and dispute resolution help prevent conflicts and manage tensions between partners. In Italy, for instance, where unions of municipalities must manage core mandatory functions for small municipalities, their statutes must explicitly define dispute resolution procedures, withdrawal conditions and financial obligations. These safeguards ensure that inter-municipal co-operation remains stable and resilient, even in changing political or financial contexts.

Balancing municipal autonomy and control

Inter-municipal co-operation should remain primarily voluntary, with clear safeguards when mandatory. Municipal autonomy implies both the right to co-operate and the right not to. Inter-municipal co-operation should therefore be primarily voluntary. In cases where co-operation is made mandatory – such as for specific services or in highly fragmented systems (Box 1.8) – legal provisions must clearly define responsibilities, governance arrangements and operating conditions. Ensuring that municipalities retain representation within joint bodies is critical to preserving local accountability and preventing co-operation from being perceived as imposed or equivalent to indirect mergers.

Legal frameworks should provide a clear and accessible basis for delegating competences. To function effectively, inter-municipal co-operation requires a comprehensive, coherent and accessible legal framework. Under the principle of legality, municipalities can only exercise and delegate powers explicitly granted by law. This means that co-operation arrangements must be clearly authorised, with provisions specifying how competences can be shared or transferred to inter-municipal entities. A well-defined legal basis ensures legal certainty, facilitates implementation and guarantees that co-operation operates within established public law frameworks (Council of Europe, 2010[17]).

Allowing piloting and experimentation before expanding

Legal frameworks should enable experimentation and pilot projects to build trust and inform effective co-operation models. Countries with limited experience in inter-municipal co-operation can benefit from frameworks that actively encourage municipal trials and pilot initiatives (OECD, 2024[7]). Allowing municipalities within the same region or functional area to experiment with co-operation helps build trust, strengthen institutional capacity and generate practical lessons through monitoring and evaluation. Pilots provide a low-risk environment to test different forms of co-operation, assess feasibility and refine governance arrangements before scaling up.

Pilot approaches should inform reforms while remaining adaptable to local contexts. Policy experimentation can play a key role in supporting broader national reforms, as lessons from pilot initiatives help identify what works in practice. However, successful models should not be replicated mechanically. Instead, policymakers should adapt them to local governance structures, economic conditions and institutional capacities to ensure relevance and effectiveness.

Several OECD countries provide concrete examples of this approach. In Norway, the Pilot Schemes in Public Administration Act establishes a clear legal framework for municipal experimentation, with defined objectives, governance arrangements and oversight, helping reduce legal uncertainty and administrative complexity (OECD, 2024[7]). In Sweden, national support for pilot projects – such as the “Co-operation on mobility for municipalities” initiative under the Drive Sweden programme – enables municipalities to jointly test innovative solutions and share experience (Drive Sweden, n.d.[19]). Similarly, in Lithuania, a pilot supported by the European Commission’s Technical Support Instrument brought together municipalities in the Tauragė+ functional area to test shared service provision in healthcare and long-term care, resulting in concrete implementation roadmaps (Box 2.4). These examples show how pilot-based approaches can build experience, improve policy design and support the gradual development of sustainable inter-municipal co-operation.

Box 2.4. Piloting inter-municipal co-operation in Tauragė+ functional zone, Lithuania

A pilot was carried out in the Tauragė+ functional zone, which brings together the municipalities of Tauragė, Jurbarkas, Pagėgiai and Šilalė, to test a practical model for shared municipal service provision. The exercise focused on primary healthcare (PHC) and long-term care (LTC)-two services facing significant pressure due to demographic decline, staff shortages, fragmented responsibilities and unequal physical access to care across the area.

Drawing on field missions, data analysis and local workshops, the pilot produced two detailed roadmaps to guide municipalities in jointly planning, financing and delivering PHC and LTC. A first priority was establishing a reliable shared database to support joint planning, cost-sharing and performance monitoring.

For PHC, recommended actions included reducing unnecessary hospital referrals, developing mobile services, sharing human resources across municipalities, and creating integrated PHC centres to improve access and quality. For LTC, the pilot proposed strengthening home care services, improving staff conditions, enabling cross-municipal service use, expanding day-care provision and shifting progressively from hospital-based to modern service-housing models to reduce costs and enhance patient experience

The pilot also outlined governance and funding steps, such as defining co-operation bodies, clarifying decision making rules and setting equitable financing principles, to ensure sustainable implementation. The experience from Tauragė+ is intended to inform broader efforts to modernise municipal service provision and scale up inter-municipal co-operation nationwide.

Source: (OECD, 2024[7]).

OECD recommendations for developing a solid legal framework for inter-municipal co-operation

Drawing on the analysis of legal frameworks and country experiences presented in this chapter, a number of common design principles emerge for developing effective inter-municipal co-operation. The checklist below synthesises these insights and provides practical guidance for policymakers seeking to establish or reform the legal framework for inter-municipal co-operation.

Key recommendations for developing a solid legal framework for inter-municipal co-operation

• Ensure constitutional frameworks enable inter-municipal co-operation, by protecting municipal autonomy and the right to associate, even where inter-municipal co-operation is not explicitly mentioned in the constitution.

• Consolidate inter-municipal co-operation provisions into a coherent and accessible legal framework, ideally within a single overarching law (e.g. Local Government Act), to reduce fragmentation and legal uncertainty and complement core legislation with dedicated or sectoral laws where relevant, to provide additional clarity and expand available co-operation tools.

• Define clear but flexible inter-municipal co-operation forms:

  • Provide a range of clearly defined inter-municipal co-operation forms, from flexible contractual arrangements to more institutionalised entities, allowing municipalities to choose models suited to their needs.

  • Clearly define the key components of inter-municipal co-operation arrangements, including legal basis, delegation of competences, governance structures, accountability mechanisms, and procedures for creation, management and dissolution.

• Balance municipal autonomy and control:

  • Establish robust oversight and accountability mechanisms, ensuring transparency, legal compliance and financial soundness, while maintaining accountability both to higher authorities and municipal councils.

  • Include clear rules for dispute resolution, withdrawal and financial obligations, to enhance stability and manage tensions between participating municipalities.

  • Balance flexibility with legal certainty, avoiding both overly rigid frameworks that limit adaptability and overly vague ones that create uncertainty and inefficiencies.

  • Ensure inter-municipal co-operation remains primarily voluntary, while clearly regulating cases where co-operation is mandatory and safeguarding municipal representation and accountability.

  • Provide a clear legal basis for delegating competences, in line with the principle of legality, to enable secure and transparent transfer of responsibilities.

• Allow experimentation:

  • Encourage experimentation through pilot projects and trial schemes, allowing municipalities to test co-operation models, build trust and refine governance arrangements before scaling up.

  • Use pilot experiences to inform legal and institutional reforms, while adapting lessons to local contexts rather than replicating models mechanically.

2.4. Setting the appropriate institutional framework

Legal frameworks enable inter-municipal co-operation, but outcomes depend on decentralisation, responsibilities and support conditions. While legal frameworks define the possibilities for inter-municipal co-operation, they do not in themselves guarantee effective implementation. Across OECD countries, similar legal tools can lead to very different outcomes depending on the degree of decentralisation, the scope of municipal responsibilities, functional territorial dynamics and the availability of institutional and technical support.

Effective inter-municipal co-operation requires aligning functions, territorial scales and institutional forms with the nature of services. This chapter therefore focuses on how inter-municipal co-operation is translated into practice. It examines which functions are most suitable for co-operation, how responsibilities can be shared or delegated, and how co-operation boundaries can be aligned with functional geographies that often extend beyond administrative borders. It also analyses how different forms of co-operation – ranging from contractual arrangements to private-law bodies and more integrated public-law entities – can be matched to the nature and complexity of services. The chapter also highlights the importance of institutional and technical support, including tools, co-ordination mechanisms and support from higher levels of government.

Defining the sectors and functions most relevant for inter-municipal co-operation

The scope of inter-municipal co-operation largely depends on the level of decentralisation and the breadth of municipal responsibilities. The functions that municipalities can share through inter-municipal co-operation are fundamentally shaped by how responsibilities are allocated within a country (see Table 1.1 in Chapter 1). In more centralised systems, where municipalities have limited competences, co-operation is typically confined to co-ordination, advocacy or a narrow set of service arrangements. By contrast, in decentralised systems where municipalities are responsible for a wider range of services, inter-municipal co-operation can extend to more substantive functions such as joint planning, infrastructure provision or service delivery. Across OECD countries, this variation is significant: municipalities in Nordic countries, for example, account for a large share of public expenditure and play a major role in service delivery, whereas in countries such as Costa Rica, Greece, Hungary, Ireland, Luxembourg, Mexico, New Zealand or Türkiye, their responsibilities – and thus the scope for co-operation – are more limited (OECD-UCLG, 2022[20]; OECD, 2025[21]; OECD, 2024[22]).

Inter-municipal co-operation is particularly relevant for services that require scale and cross-boundary co-ordination. Beyond the institutional allocation of powers, some responsibilities are inherently more suitable for inter-municipal co-operation because they require a minimum scale or co‑ordinated action across jurisdictions. Joint service provision can generate efficiency gains by pooling resources, achieving economies of scale and avoiding wasteful duplication or competition among municipalities. This is particularly relevant for services with a regional footprint, where unco-ordinated policies lead to higher costs or negative spillovers. Typical examples include sewage disposal, waste management, water and sanitation, transport and land-use planning, specialised social or health services, and broader environmental policies (see Table 1.1 in Chapter 1). These sectors recur across OECD countries as core areas for inter-municipal co-operation, reflecting their need for coherent planning and delivery beyond individual municipal boundaries. They can benefit from shared infrastructure, technical expertise, integrated catchment areas, or co‑ordinated planning - advantages that small or fragmented municipalities cannot achieve alone. The Council of Europe’s toolkit similarly emphasises that inter-municipal co-operation is most effective when applied to services whose catchment areas naturally exceed municipal boundaries, such as utilities, emergency services, or spatial planning (Council of Europe, 2010[17]).

To ensure effectiveness, however, the allocation of responsibilities to inter-municipal arrangements should be based on careful, evidence-based analysis, with clearly defined and formally delegated competences to avoid overlaps, duplication and unnecessary institutional complexity.

Defining the geographic boundaries of inter-municipal co-operation

Functional geographies differ across services, requiring flexible and multi-scalar co-operation arrangements. Public services and policy sectors do not operate within uniform territorial boundaries, as economic flows, commuting patterns and service use often extend beyond administrative borders (OECD, 2020[6]). The optimal scale for service delivery therefore varies by sector: public transport typically requires a large functional area such as a labour market, while services like waste collection or local road maintenance may be more efficient at a smaller scale. This diversity means that a single inter-municipal structure is unlikely to be suitable for all functions. Moreover, functional areas are dynamic, particularly in urban contexts, evolving with demographic change, economic activity and mobility patterns, which may reduce the effectiveness of static co-operation arrangements over time (Butt et al., 2020[23]).

Aligning inter-municipal co-operation boundaries with functional areas enhances effectiveness and long-term sustainability. To maximise impact, the geographic scope of inter-municipal co-operation should be defined according to the functions it is intended to perform. Aligning co-operation arrangements with real service catchment areas helps ensure that policies reflect how services are used in practice and improves efficiency and co-ordination (OECD, 2025[24]). This is particularly important in both urban and rural contexts, where functional linkages often transcend administrative boundaries. In rural areas, for instance, planning at the scale of interconnected service areas – linking villages, towns and dispersed settlements – can improve service delivery. In Czechia, for example, recent research shows that local actors themselves recognise the need for a “large geographical area or population” for inter-municipal co-operation to reach its full potential, as small municipalities often lack the critical mass required for effective joint action (Bakoš et al., 2021[25]). It should be noted that demographic change further complicates this challenge, as population decline and ageing can alter service demand and functional catchment areas over time, requiring inter-municipal arrangements to remain adaptable.

Flexible and networked governance approaches can address mismatches between administrative and functional scales. When a single territorial structure cannot match all service needs, alternative approaches are required. Polycentric or networked governance models - where multiple, sometimes overlapping co-operation arrangements exist for different sectors - an provide greater flexibility, provided they are supported by strong co-ordination and accountability mechanisms. Inter-governmental co-operation and revenue-sharing schemes can also help internalise spillovers and distribute costs more fairly without repeatedly redefining boundaries. Ultimately, the key challenge is not to identify a single “optimal” scale, but to design adaptable, multi-level governance systems capable of evolving alongside changing functional geographies.

Determining which responsibilities can be shared or delegated: from flexibility to mandatory schemes

The degree of flexibility in delegating municipal competences to inter-municipal bodies varies across countries. In some OECD systems, municipalities enjoy broad discretion to delegate a wide range of functions – including core responsibilities – to inter-municipal co-operation structures when this improves service delivery. This flexible model, typical of more decentralised countries, allows municipalities to pool functions such as administrative services, utilities, planning or social services based on local needs and voluntary agreement.

More restrictive frameworks limit delegation to specific functions, often excluding core or sovereign responsibilities. In other countries, legal provisions tightly regulate which competences can be transferred to inter-municipal bodies. Delegation may be restricted to specific service areas – such as waste management, water supply or shared administrative services – while regulatory powers, civil registry functions or state-delegated tasks remain at the municipal level. These frameworks aim to preserve local sovereignty over politically sensitive functions but may limit the scope of co-operation.

Hybrid models combine mandatory and optional competences to balance coherence and flexibility. France provides an illustrative intermediate approach. While all municipalities are required to belong to an inter-municipal structure (EPCI), the transfer of responsibilities follows a differentiated system: certain competences are mandatory for all entities of a given type (e.g. economic development, spatial planning), while others remain optional and can be transferred at the discretion of member municipalities. This model ensures a common baseline of functions while preserving room for local adaptation (Box 2.5).

Box 2.5. Delegated responsibilities to EPCIs in France

The four categories of EPCI with own-source taxation exercise obligatory competences transferred from municipalities by law, mandatory competences and optional responsibilities entrusted by the communes (Table 2.2). The largest changes came from Loi NOTRe (2015–2017), which expanded the mandatory list, and the Loi 3DS (2022), which introduced “transferts à la carte”. A last law, adopted on 11 April 2025, removed the mandatory transfer of water and sanitation for Communautés de communes (Sénat, 2025[18]).

Table 2.2. Mandatory and optional competences by category of inter-municipal structures (EPCI with own-source taxation)

Competence	Communautés de communes (CC)	Communautés d’agglomération (CA)	Communautés urbaines (CU)	Métropoles
Spatial planning & urban development	Mandatory	Mandatory	Mandatory	Mandatory
Economic development	Mandatory	Mandatory	Mandatory	Mandatory
GEMAPI (watercourse management & flood prevention)	Mandatory	Mandatory	Mandatory	Mandatory
Reception areas for travellers	Mandatory	Mandatory	Mandatory	Mandatory
Household waste collection & treatment	Mandatory	Mandatory	Mandatory	Mandatory
Water supply	Not mandatory1	Mandatory	Mandatory	Mandatory
Sanitation	Not mandatory1	Mandatory	Mandatory	Mandatory
Housing policy	Optional	Mandatory	Mandatory	Mandatory
Urban policy (politique de la ville)	Optional	Mandatory	Mandatory	Mandatory
Management of urban stormwater	Optional	Mandatory	Mandatory	Mandatory
Roads of community interest	Optional	Optional	Mandatory	Mandatory
Sports & cultural facilities of community interest	Optional	Optional	Mandatory	Mandatory
Cemeteries, crematoria & abattoirs	Optional	Optional	Mandatory	Mandatory
Fire & rescue services	Optional	Optional	Mandatory	Mandatory
Air pollution control & noise management	Optional	Optional	Mandatory	Mandatory
Telecommunication networks & infrastructure	Optional	Optional	Optional	Mandatory
Local climate-air-energy plan (PCAET)	Optional	Optional	Optional	Mandatory

Note: ¹ The April 2025 law made water and sanitation no longer mandatory for communautés de communes, except where all member municipalities had already transferred them before the law entered into force in April 2025.

Source: (Sénat, 2025[18]).

Choosing the right inter-municipal co-operation form for the right activity

The choice of inter-municipal co-operation form is closely linked to the nature and complexity of the services involved. Different services require different levels of institutionalisation, financial autonomy and managerial capacity. For basic or operational tasks – such as joint procurement, shared administrative services or minor infrastructure projects – contractual agreements are often sufficient. More complex tasks, however, may require more formal and structured arrangements with dedicated governance and financing mechanisms.

This section provides an overview of the main types of co-operative arrangements, outlining their key characteristics, how they are used in OECD and accession countries, and the benefits they can offer, as well as the challenges they may present.

Co-operating through inter-municipal contracts and agreements

Contract-based inter-municipal co-operation offers a flexible and low-cost entry point for collaboration. Soft arrangements – such as shared service agreements, joint programmes or single- and multi-purpose contracts – allow municipalities to co-operate without creating a separate legal entity, hiring dedicated staff or mobilising significant capital. Operating under standard local government contracting rules and financed through municipal budgets, these arrangements are relatively easy to establish and adapt, making them particularly suitable for initial or targeted forms of collaboration.

These arrangements are well suited to operational tasks but less adapted to long-term or integrated co-operation. Contract-based co-operation is commonly used for administrative services, shared staff, procurement or single-service delivery, enabling municipalities to retain full institutional autonomy while reducing costs. However, their flexibility and limited institutionalisation also constrain their capacity to support strategic planning, long-term investment or multi-sectoral integration. As a result, they are generally better suited to short-term, specific or operational functions rather than sustained, comprehensive co-operation.

Contractual co-operation models are widely used across OECD countries as pragmatic collaboration tools. These arrangements are prevalent in countries such as Australia, Ireland, New Zealand and the United Kingdom, where municipalities often collaborate through shared services rather than formal joint entities (OECD, 2017[26]). Ireland, in particular, illustrates how network-based co-operation – supported by shared ICT systems, pooled expertise and national co-ordination – can provide an effective and scalable alternative to more institutionalised forms of inter-municipal co-operation (Box 2.6).

Box 2.6. Shared services arrangements: the Irish example

Ireland stands out among OECD countries for its extensive use of shared-services arrangements as a practical and flexible form of inter-municipal co-operation. Rather than creating formal joint bodies, Irish local authorities frequently pool staff, technology, and resources under lead-authority models. “Lead-authority” models mean that one council hosts the service centre, and others join via service-level agreements. Financing involves member contributions plus sometimes national funding or co-funding.

This contractual approach has allowed municipalities to build a dense co‑operative ecosystem supported by the LGMA (Local Government Management Agency, 2024[27]) and overseen by the National Oversight and Audit Commission ( (NOAC, 2016[28]). According to the LGMA Annual Report 2023, the Agency acts as “a shared centre of excellence leading the development and implementation of shared services across the local government sector.” It works in partnership with county and city councils, which may act as lead authorities or host regional service offices.

Shared-services now cover both corporate and operational functions, including payroll (MyPay), HR, ICT, procurement, waste enforcement, road-management systems, building control and market surveillance, library management, and dog-licence administration. The NOAC-LGMA Summary 2024 confirms that shared-services expansion remains a key driver of efficiency and innovation in local government. Recent developments include a new national electoral-registration system, delivered as a shared digital platform across all 31 local authorities (LGMA & NOAC, 2024[29]).

In 2025, 38 shared-services arrangements are now in operation, hosted either by the LGMA itself or by individual local authorities and regional offices, illustrating how collaboration has become “part of the local government DNA (LGiU, 2025[30]).

In Finland, for example, inter-municipal contracts are commonly used in sectors such as water supply, building inspection, and consumer and debt counselling, sometimes driven by sector-specific legislation that requires municipalities to collaborate through contractual arrangements. At the same time, their use may be constrained in other sectors where legislation mandates more institutionalised forms of co-operation. By contrast, the potential scope of a contract-based shared services provision has also been limited over the years by special legislation requiring the compulsory usage of more institutionalised forms of co-operation in other certain service sectors. In Finland, these contracts take several forms, including joint committees, shared service arrangements, municipal outsourcing and joint civil servant contracts, each with distinct features, advantages and limitations (Table 2.3).

Table 2.3. The main forms of inter-municipal contractual arrangements applied in Finland until 2023*

	Joint committee	Joint use service	Municipal outsourcing	Joint municipal civil servants
Characterisation	One municipality is hosting a shared governance body and producing the service	Shared service arrangement	Purchased service	Shared employability
Legal status	Public law bodies based on public law contracting	Private law contracting	Private law contracting1	Joint employees or civil servants
Typical services	Social and basic health care, environmental health care, early childhood education, public transport, primary schools, rural admin., and local waste authorities	Libraries-on-wheels, nurseries, (high schools)	Nurseries, community colleges, music schools, building inspection, procurement services, and selected social services	Zoning planners, child welfare officers, head of educational and cultural services, and some project workers
Recent trend / prevalence	Created in 2007 and expanded thereafter.	Low-usage form	Modestly expanding form of inter-municipal co-operation	Steady but modest usage
Economic volumes	Remarkable until the end of 2022	Very small	Small	Relatively small
Method of creation	Consistent decisions by municipalities, contracting and setting up a governance body	IM contracting	IM contracting, which may be preceded by a public procurement under some terms	IM contracting and a recruitment
Possibilities of withdrawals (exits)	Termination of a contract	Termination of a contract	Termination or transfer of the contract	Termination of a contract
Access to private parties	No access	Yes, but rare	Yes, but rare	No
Key financial risks	If the matching principle is applied, the hosting municipality has a risk of an excessive capacity.	Typically, full cost inter-municipal service – weak incentive for productivity improvements.	Investments in new service capacity, which may remain unused in cases of contract termination	Small numbers of common municipal employees keep risks small and focused on leadership issues
Typical geographical sphere	District, region-wide	A couple of municipalities, (district)	A couple of municipalities	A couple of municipalities

Note: ¹The 2023 reform establishing the well-being service counties has modified the areas and co-operation schemes. In beginning of 2023, all health care and social services were transferred from municipalities and inter-municipal co-operations bodies to the newly established well-being service counties. This has also impacted co-operation based on inter-municipal contracts.

Source: (OECD, 2024[7])

Co-operating through private-law bodies: private-law inter-municipal associations and companies

Private-law inter-municipal co-operation offers flexible and market-oriented arrangements suited to specific services. More institutionalised forms of inter-municipal co-operation can operate under either private- or public-law models. Under the private-law model, municipalities benefit from a high degree of flexibility in choosing organisational forms, such as associations or jointly owned companies. These arrangements are particularly common in countries where municipalities have more limited statutory competences, allowing them to collaborate pragmatically in areas that do not require the exercise of core public authority.

Private-law associations are well suited to non-core, community-oriented and adaptable services. Municipal associations or non-profit entities are widely used in countries such as Bulgaria, Chile and Greece, particularly for services that require flexibility, local engagement and limited bureaucratic oversight, such as cultural activities or early childhood services. Their ability to combine municipal funding with public subsidies and local partnerships makes them especially effective for services that depend on social co-ordination rather than strict administrative control.

Inter-municipal companies provide a structured and professional model for infrastructure and commercial services. A more developed form of private-law co-operation is the inter-municipal company, widely used across OECD countries including Austria, Belgium, Finland, France, Germany and Sweden. Typically organised as limited liability companies owned by municipalities (and sometimes involving private partners), these entities are particularly suited to capital-intensive and revenue-generating services such as water, waste, energy, transport or telecommunications. Operating under commercial law and financed largely through user fees, they combine managerial flexibility and professional expertise with public oversight. However, they are generally restricted from exercising core public powers.

Country experiences highlight both the versatility and governance challenges of private-law co-operation models. For example, Belgium’s intercommunales and Austria’s municipal companies illustrate how private-law entities can efficiently manage utility and infrastructure services, while Finland’s Joint Municipal Companies (JMCs) demonstrate the scalability and sectoral breadth of this model (Box 2.7). At the same time, their expansion raises important issues related to governance, accountability and equity, requiring appropriate regulatory oversight to ensure transparency and alignment with public objectives.

Box 2.7. Inter-municipal companies: balancing public purpose and market competition

The model of inter-municipal companies is common in Austria (limited liability companies GmbH), Belgium (intercommunales), Croatia (joint trading companies, d.o.o), Denmark (jointly owned companies), Finland (Joint municipal companies – JMCs), France (SPLs and SEMLs), Germany (Kommunalunternehmen, GmbH or AG), Norway (IKS), Poland, Slovakia, Sweden and Switzerland. Some examples are provided below. Other can be found in the country snapshots (chapter 3).

• In Austria, municipalities may engage in co-operation under private law, typically through jointly owned companies or associations. Municipalities may establish limited liability companies (Gesellschaft mit beschränkter Haftung, GmbH) or other private-law entities to manage joint services, particularly those of a commercial or utility nature – such as waste management, water supply, energy provision, or business development. These entities are subject to private-law regulations, and while they can deliver public services, they cannot exercise core public powers or governance functions (e.g. municipal inspectorate, registries and tax collection).

• In Belgium, a common form of inter-municipal co-operation is inter-municipal companies (intercommunales). These companies adopt the legal form of a limited liability co-operative company, and operate within the administrative boundaries of specific municipalities or extend its activities to the entire regional territory. These entities are active in various sectors, such as water, energy, hygiene, funeral services, telecommunications and cable television (OECD, 2024[31]). Wallonia region makes a distinction between “pure public inter-municipalities” (intercommunales pures de gestion publique) composed solely of public partners, and “mixed inter-municipalities” (intercommunales mixtes) that allow limited private participation.

• In Finland, Joint Municipal Companies (JMCs) are a widely used private-law form of inter-municipal co-operation, particularly in sectors such as housing, energy, water, education and waste management. Owned by multiple municipalities, they allow for flexible and efficient service delivery through corporate structures that facilitate faster decision making, access to financing and, in some cases, revenue generation, while complying with EU regulatory frameworks. Their rapid expansion reflects these operational advantages, but it also raises challenges related to reduced transparency, weaker political oversight, territorial disparities and disagreements over cost-sharing, highlighting the need for clear governance and accountability mechanisms.

• In Norway, municipalities (and counties) may jointly establish inter-municipal companies (interkommunale selskaper, IKS) under the Inter-Municipal Companies Act (1999). These are public-law entities with legal personality, jointly owned and managed through boards or general meetings where each owner is represented. They are widely used for services requiring technical expertise or infrastructure, such as water supply, waste management, archives, regional museums, fire and rescue, renovation and in-house support services. In 2023, there were over 220 such companies nationwide.

Source: (OECD, 2024[7]) (OECD, 2024[32]).

Institutionalised co-operation under the public law model

Public-law inter-municipal co-operation provides the most integrated and institutionalised form of collaboration. The establishment of single- or multi-purpose public-law authorities represents the most formalised type of inter-municipal co-operation. Created voluntarily (and only exceptionally imposed), these entities have their own legal personality, governing bodies, budgets, staff and, in some cases, delegated public powers. This high level of institutionalisation enables municipalities to pool responsibilities and manage services or policies jointly through stable and professional structures.

Different degrees of integration exist within the public-law model, reflecting varying levels of ambition and functional scope. Public-law co-operation can range from specialised entities focused on specific services (e.g. single- or multi-purpose syndicates) to more integrated territorial authorities with broader mandates covering multiple sectors. In practice, these forms exist along a continuum rather than as rigid categories, with higher levels of integration generally associated with stronger governance structures, dedicated resources and wider competences (Table 2.4).

More integrated public-law bodies enable strategic territorial governance but raise governance and accountability challenges. The most advanced forms of co-operation combine service delivery with strategic functions such as spatial planning, infrastructure development or regional economic policy, allowing for more coherent and efficient action at the functional scale. They often act as key intermediaries between municipalities and higher levels of government, benefiting from greater administrative capacity and financial stability. However, their growing role can raise concerns about democratic oversight, transparency and accountability, as decision making shifts to indirectly governed structures.

Country experiences illustrate both the expansion and increasing importance of these models. Several countries are strengthening this form of co-operation – for example, Czechia with the introduction of “communities of municipalities” in 2024, or reforms in Estonia and Colombia (Box 2.8). France represents one of the most advanced cases, where EPCIs operate as highly integrated public-law entities with broad competences and taxing powers. While they do not constitute a formal new tier of government, their scale and functions position them as key actors in territorial governance, highlighting both their potential and the need for robust accountability frameworks.

Table 2.4. Selected examples of inter-municipal co-operation public law bodies in OECD and accession countries

	Names	Common areas of responsibilities
Austria	Gemeindeverbände Since 2011, Mehrzweckverbände	Gemeindeverbände: single-purpose, traditionally water or waste management Mehrzweckverbände multi-purpose associations deliver a broader range of services such as planning, social welfare, and local development
Colombia	Associations of Municipalities (Asociaciones de Municipios – Ams) Metropolitan areas (Mas)	AMs: environmental management, rural development, water and sanitation and administrative support. MAs: supra-municipal functions such as mobility integration, public transport, environmental regulation, air quality management and strategic land-use co-ordination
Croatia	Joint public-law institutions / bodies (zajednička javna ustanova):	Fire and civil protection services, waste management, environmental services, cultural and social services
Czechia	Voluntary Associations of Municipalities or VAMs (dobrovolné svazky obcí or DSO) “Community of Municipalities” (Společenství obcí) or CoM	VAMs: mostly single-purpose commonly waste management, sewerage and water supply. Other areas: maintenance of public spaces, education, social care, health services, cultural and leisure activities, tourism development, and landscape management CoM: multi-purpose, strategic development, state delegated functions.
Denmark	Joint administrative agencies (JAA)	Large range of responsibilities delegated by municipalities
Estonia	Joint administrative agencies (JAA)	Social services, education administration, spatial planning or permit issuing
Finland	Joint municipal authorities (JMAs)	Healthcare (until 2023), education, and regional planning
France	Metropolis (métropoles) Urban communities (communautés urbaines) Aglomeration communities (communautés d’agglomération) Communities of municipalities” (communautés de communes)	Large range of responsibilities (mandatory and optional)
Germany	Special-purpose association (Zweckverband).	Technical and infrastructure services such as water and wastewater management, waste disposal, public transport or hospital provision.
Iceland	Co-owned agencies (byggðasamlög)	Fire and rescue, waste management, social services, and education
Italy	Union of municipalities (Unioni di Comuni)	Urban management, including town planning and environmental functions, local road networks, culture and recreation, social welfare services
Japan	Wide-area administrative associations – WAA (kōiki rengō) Special-purpose district governments SPD (ichibu jimu kumiai),	WAA: fire and emergency services, ambulance dispatch, elderly-care insurance administration, and regional transport planning SPD: waste management, waste-to-energy facilities, water supply and sewerage, crematoriums, and specialised health and welfare facilities
Korea	Special-purpose local governments / special joint bodies	Waste management, local transport, water and sewerage, emergency services, and some welfare and development functions.
Mexico	Inter-municipal associations (asociaciones intermunicipales or mancomunidades)	Water supply and sanitation, solid-waste treatment, environmental and natural-resource management, and in some cases regional economic development
Netherlands	Public body (openbaar lichaam)	Shared administration & business operations, Social and healthcare services, Economic development & territorial functions, Tax collection & fiscal administration, Safety & emergency management, Environmental protection & regulation
Norway	Municipal task community (kommunalt oppgavefellesskap)	It is commonly used for shared services such as ICT, administration, planning, and technical operations
Portugal	Inter-municipal Communities (Comunidades Intermunicipais CIMs) Metropolitan Areas (Mas)	Planning and development, transport, mobility, waste management and water/sanitation; engagement with central administration in domains such as education, vocational training networks and infrastructure
Romania	Inter-community development association (IDA) (asociație de dezvoltare intercomunitară) Metropolitan areas	IDA: utilities such as water, sewerage, solid waste management, or local transport MAs: spatial planning, mobility, public services and infrastructure.
Slovakia	Joint Municipal Offices (JMOs, spoločné obecné úrady):	Delegated state-administration tasks – 21 administrative domains
Slovenia	Joint municipal administrations (JMAs) (skupna občinska uprava)	Building inspection, local police and wardens, internal audit, legal services, or spatial planning
Spain	Associations of municipalities (Mancomunidades) Territorial entities (comarcas)	Mancomunidades: shared services such as water supply, waste management, transport, environmental protection, or social services Comarcas: spatial planning, local development, infrastructure co‑ordination, and service delivery
Sweden	municipal association (kommunalförbund),	Rescue and emergency services, water supply and sewerage, energy services, regional public transport, educational support services, shared administrative functions and labour market interventions
Switzerland	Public-law association of municipalities (Zweckverband / Gemeindeverband / association de communes).	Waste treatment, water and wastewater services, firefighting and rescue, primary education or regional planning

Source: Country Snapshots (chapter 3).

Box 2.8. Recent reforms strengthening inter-municipal co-operation

• In Czechia, 2024, an amendment to the Act on Municipalities (Act No. 128/2000 Coll., Zákon 418/2023 Sb.) introduced a new form of inter-municipal co-operation: the Community of Municipalities (Společenství obcí), effective January 2024 (Ministry of Interior of Czechia, 2025[33]). This model strengthens co-operation and shared service delivery among small municipalities through a stronger legal and financial framework, including shared municipal officers and the ability to perform delegated state administrative tasks. Unlike VAMs, Communities of Municipalities must meet minimum size and territorial criteria (at least 15 municipalities or three-fifths of those in the same administrative district) and adopt a binding development strategy approved by a majority of mayors. Their revenues come mainly from membership fees, user charges and subsidies, and several VAMs are currently transforming into this new model. As of October 2025, 36 Communities bring together 730 municipalities (11.7% of all), covering 7.2% of the population and 11.8% of the territory (Ministry of Interior of Czechia, 2025[33]).As of October 2025, 36 Communities bring together 730 municipalities (11.7% of all), covering 7.2% of the population and 11.8% of the territory (Ministry of Interior of Czechia, 2025[33]).

• In Estonia, the 2017 Administrative Reform introduced joint administrative agencies (JAAs) as a more formalised public-law model for inter-municipal co-operation. JAAs enable municipalities to jointly perform statutory administrative functions such as social services, education administration, spatial planning and permit issuing. They have their own budgets and staff, may exercise public authority, and benefit from clearer rules on governance, financing and supervision, thereby strengthening administrative capacity, particularly for small municipalities that remained independent after mergers. JAAs are considered a key institutional innovation of the reform, providing a more accountable and robust framework for inter-municipal co-operation (Ministry of Finance of the Republic of Estonia, 2019[34]).

• In Colombia, Associations of Municipalities (Asociaciones de Municipios, AMs), created in 2011, are public-law entities that support joint service provision, co‑ordinated planning and shared development projects. Metropolitan Areas must adopt strategic development and land-use plans (Plan Estratégico Metropolitano de Ordenamiento Territorial, PEMOT) and manage key supra-municipal functions such as mobility integration, public transport, environmental regulation and land-use co‑ordination. Recent policy reforms, notably the 2022–2026 National Development Plan (DNP, 2023[35]), have strengthened inter-municipal co-operation by linking national co-financing and technical assistance to participation in formal co-operation structures and expanding the role of AMs and Metropolitan Areas as cadastral managers, enhancing their fiscal capacity (OECD, 2024[36]).

Source: (Ministry of Interior of Czechia, 2025[33]) (Ministry of Finance of the Republic of Estonia, 2019[34]) (OECD, 2024[36]).

Strengthening inter-municipal co-operation through institutional, technical and administrative support

Granting institutional support from central and regional governments to foster co-operation

Central or regional supports are key enablers of effective and scalable inter-municipal co-operation. National and regional governments play a central role in fostering inter-municipal co-operation by providing coherent policy direction, legal clarity and strategic incentives. Country experiences show that sustained public support is often decisive. In France, for example, the widespread development of inter-municipal co-operation has only been possible thanks to a strong, sustained and coherent national policy supporting its expansion since 1992 (Sénat, 2025[18]). In Portugal, the national government has long facilitated inter-municipal co-operation. Since 2003, laws allowed municipalities to form joint entities for both general and specific purposes, which evolved into the current Inter-municipal Communities (CIMs) in 2008 and 2013 (Law 75/2013), the latter being updated by the Law 24-A/2022 (which amends the legal framework for local authorities, expanding on the regime for metropolitan areas and intermunicipal communities). In Croatia, the government is developing guidelines and tools to clarify inter-municipal co-operation, including an IT system that will help cities and municipalities assess their capacities and identify potential co-operation areas. Using data from the Ministry of Justice and Public Administration’s “Optimisation of the System of Local and Regional Self-government”, the system will offer a comprehensive overview of administrative, fiscal and human resource capacities. By helping local governments map capacity gaps and potential partners, it aims to stimulate interest in adopting inter-municipal co-operation arrangements (OECD, 2024[37]). In federal and regionalised systems, the level of engagement by state or regional authorities strongly influences the development of inter-municipal co-operation, with active support leading to more structured and widespread arrangements (Box 2.9).

Box 2.9. Uneven inter-municipal co-operation development reflects differing regional support and engagement

In Spain, Autonomous communities (Acs) play a crucial role in promoting inter-municipal co-operation, be it through the regional legal framework or incentives. It may also reflect the willingness to promote IMV against municipal mergers, an option which has been preferred by some Acs. Today, the Castilla y León region has the highest number of mancomunidades in Spain, far exceeding all other regions (Figure 2.2), reflecting the strong reliance on municipal co-operation in rural and sparsely populated areas in a region which also has the highest municipal fragmentation (minifundismo). More than 90% of municipalities in seven out of the nine provinces participate in at least one co-operation agreement (OECD, 2025[38]).

Figure 2.2. Number of associations of municipalities (mancomunidades) in Spain (2024)

Source: (OECD, 2025[38]; Toscano Gil Francisco, 2025[39]; Government of Spain, 1985[40]).

In Italy, there are also significant regional differences in the use and promotion of inter-municipal co-operation (Figure 2.3). Regions with strong legislative and administrative capacities have actively supported unions of municipalities through financial incentives and regulatory frameworks, resulting in more integrated and stable co-operation. In contrast, other regions tend to rely more heavily on conventions and consortia, reflecting more limited administrative capacity and fragmented municipal structures.

Figure 2.3. Unions of municipalities (Unioni di Comuni ) are very uneven across Italian regions

Percentage of municipalities in a Union of Municipalities by region

Source: (OECD, 2025[41]).

Co-ordination instruments and incentives help align actors and formalise collaboration. Governments can further promote co-operation through contractual arrangements across levels of government – such as France’s CRTE, Portugal’s CDT or devolution agreements in the United Kingdom – which clarify roles, align priorities and provide medium-term visibility (Box 2.10). These instruments strengthen commitment among municipalities and can be reinforced by financial incentives, including EU funding programmes.

Box 2.10. Intergovernmental contracts to foster a co-operation culture in OECD countries

• France: the Contrats pour la réussite de la transition écologique (renamed in 2023 from Contrats de Relance et de Transition Écologique previously) were created in 2020 to provide a structured framework for long-term co-operation between the central and local governments. They serve three main functions: (i) they organise public action around a shared territorial project, (ii) they accelerate the ecological transition by identifying and supporting local projects that contribute to national climate, biodiversity, and resource management targets, and (iii) they guide municipalities in implementing projects by providing financial and technical assistance. This combination of strategic alignment, participatory planning, and long-term support helps build trust among municipalities and strengthens collaborative governance at the subnational level.

• Portugal: Under the Local Government Framework Law (Lei nº 75/2013) and the decentralisation framework (Lei nº 50/2018), CIMs can engage into multi-level contracts with the central government. In particular, CIMs may enter into inter-administration contracts (contratos interadministrativos) through which specific responsibilities related to planning, co-ordination or service delivery are assigned, in line with national legislation. In addition, under the EU funds framework (Portugal 2030), CIMs and metropolitan areas can sign “Agreements for Development and Territorial Cohesion (Contratos para o Desenvolvimento e Coesão Territorial” or CDCT) with the State, operationally represented by the Managing Authorities of the Regional Programmes. These multiannual contracts allocate EU and national funding to each CIM or metropolitan area, define priorities, investment objectives and performance indicators, and formalise the role of CIMs as key intermediaries for implementing place-based investments (CCDR-Norte, 2024[42]).

• United Kingdom: In England, Devolution agreements illustrate how arrangements between central government and groups of municipalities can foster deeper co-operation and strengthen multilevel governance. Under the current approach, central government agrees multi-year agreements with Strategic Authorities (SAs), setting out shared priorities, delegated powers, and integrated funding commitments. These agreements enable authorities to exercise joint powers over transport, skills and spatial planning, usually under a directly elected mayor, in order to drive growth at a local level. As set out in the 2024 Devolution White Paper: Power and Partnership – Foundations for Growth, which has been followed with the English Devolution and Community Engagement Bill (currently passing through Parliament), some SAs can receive an “Integrated Settlement” which provides significant new funding flexibilities, allowing Mayors to spend money in a way that better reflects their local priorities and empowering them to make the strategic policy decisions (UK Government, 2024[43]).

Providing technical support to enhance co-operation

Practical support mechanisms are essential to translate legal frameworks into operational arrangements. Providing technical assistance and advisory services that guide municipalities through the process of designing and managing co‑operative arrangements can play a decisive role in the uptake of inter-municipal co-operation and is effective development. In many OECD countries, national ministries or regional agencies offer specialised support units or knowledge hubs that provide hands-on guidance on legal frameworks, governance structures and service delivery and cost-sharing models. For instance, in France, the Ministry of the Interior's General Directorate of Local Authorities produces guides and tools to help municipalities navigate the landscape of inter-municipal co-operation, and the National Agency for Territorial Cohesion (ANCT) encourages the exchange of best practices, such as pooling project management functions (DGCL, 2025[44]). Czechia has recently developed a web platform to support the creation and operation of the new “Communities of Municipalities”, established in 2024 (Box 2.11). Other examples include the Manual Toolkit developed by the Council of Europe to support inter-municipal co-operation and share good practices (Council of Europe, 2010[17]; CoE - Congress of Local and Regional Authorities,, 2007[45]). The Council also regularly conducts missions to support countries in developing inter-municipal co-operation frameworks through its Centre of Expertise for Multi-level Governance and its Programme on Good Governance.

Box 2.11. Platform to support the new “Communities of Municipalities” in Czechia

The Ministry of Interior of Czechia has developed a web platform to support the creation and operation of the new Communities of Municipalities. The portal serves as a one-stop resource hub, offering templates, legal guidance, data on funding opportunities and numerous methodological tools for municipalities and regions. It includes step-by-step guides for founding a Community, sample statutes, registration instructions with regional offices and a registry of existing Communities. The site also features thematic modules covering education, social services, public procurement and shared officers, alongside a regularly updated list of national grants and calls for proposals available only to these bodies. By providing structured support and best-practice cases, the platform aims to accelerate the take-up of this co‑operative model and ensure consistent standards in governance and delivery across the country.

Source: Ministry of Interior Platform: https://spolecenstviobci.gov.cz/.

National associations of local authorities also play a key role by offering capacity-building, knowledge sharing and peer-learning networks. National associations of local authorities can also play a key role in supporting inter-municipal co-operation through guides, capacity-building or technical assistance. For example, the Association of Netherlands Municipalities (VNG) provides support to its 355 Dutch municipalities but also legal inter-municipal co-operation bodies. The Association of Finnish Local and Regional Authorities (AFLRA) also provides services to and co‑operates with joint municipal authorities (CEMR, 2019[46]). In France, strong support is provided by a dedicated association representing French metropolitan, urban, agglomeration and community groupings, “Intercommunalités de France”. The association works to strengthen the capacities, skills and governance of EPCIs by offering thematic maps and indicator dashboards, methodological guides and studies (e.g. on governance, proximity and efficiency) to inform member inter-municipal entities. It also facilitates peer networks and dialogue with central government to address evolving competences (such as mobility or waste) and supports associations in negotiating competence transfers and shared strategic planning (Intercommunalités de France, 2025[47]).

Strengthening administrative capacity for effective inter-municipal co-operation

Effective inter-municipal co-operation depends on the availability of skilled administrative and technical staff. Municipalities must be able to plan, implement and monitor shared services efficiently, requiring expertise in areas such as procurement, financial management, spatial planning and digital administration. For example, joint waste management or water services demand engineers, data managers and environmental specialists capable of overseeing technical operations and ensuring compliance with environmental standards. Similarly, intermunicipal bodies co‑ordinating transport networks or spatial planning should benefit from staff trained in project management, GIS analysis and inter-jurisdictional co‑ordination.

A key factor in strengthening inter-municipal co-operation performance is to have a dedicated administrative team within co-operation structures. Shared arrangements function best when they have permanent staff who are directly accountable to the intermunicipal entity, rather than personnel whose time is divided between municipal and inter-municipal co-operation duties. Dual employment, where the same person works both for a member municipality and for the joint entity, often leads to conflicts of priorities, workload duplication and weak accountability. Establishing an independent inter-municipal co-operation administration or technical office, as seen in France’s EPCIs or Italy’s inter-municipal unions, helps ensure continuity, institutional memory and professional management. However, smaller or rural municipalities frequently struggle to recruit and retain qualified professionals, given limited budgets and career prospects.

Higher levels of government can also support this through training programmes, technical assistance and staff secondment schemes, helping municipalities engage effectively in co-operation, such as Poland with its Advisory Support Centre (Box 2.12). In France, the National Centre for Subnational Government Staff (Centre national de la fonction publique territoriale – CNFPT) plays a key role in strengthening the administrative and professional capacities of EPCIs by offering dedicated training programmes for both inter-municipal staff and municipal agents working within or alongside EPCIs. Through its “Path towards inter-municipal co-operation” (Itinéraire Intercommunalité), the CNFPT provides modules on the fundamentals of inter-municipal co-operation, governance structures, financial management and fiscal frameworks specific to EPCIs. Additional specialised courses cover public procurement and service management, legal and organisational aspects of shared services, and the roles and responsibilities of elected officials within inter-municipal governance (CNFPT, 2025[48]).

Recognition, visibility and learning mechanisms reinforce engagement and performance. Non-financial incentives such as awards, benchmarking, public recognition and dissemination of good practices can strengthen political commitment and encourage innovation. Combined with peer learning and knowledge-sharing platforms, these mechanisms help municipalities build confidence, replicate successful approaches and sustain co-operation over time.

Box 2.12. Government support and capacity-building for inter-municipal co-operation: Poland example

In Poland, the national government has taken an increasingly active role in supporting local authorities through the Centrum Wsparcia Doradczego (CWD - Advisory Support Centre), a large-scale advisory initiative aimed at strengthening strategic and administrative capacity for co-operation.

The CWD programme was launched in September 2020 by the Ministry of Funds and Regional Policy (MFiPR) in partnership with regional governments and expert organisations. Its objective is to provide tailored advisory and analytical support to partnerships of municipalities in preparing joint territorial development strategies, investment plans and integrated projects (Ministry of Funds and Regional Policy, 2020[49]). Through multidisciplinary expert teams, the programme supports local governments in building administrative capacity and professional expertise, enabling them to assess community needs, plan strategically, and implement integrated socio-economic development projects in co-operation with neighbouring local governments (Ministry of Funds and Regional Policy, 2024[50])

The pilot phase (CWD I) ran between 2020 and 2022 and involved 38 territorial partnerships, encompassing 338 municipalities, 33 counties from 15 voivodeships (18 out of 302 urban communes, 228 out of 1 523 rural communes and 92 out of 652 urban-rural communes). It targeted areas with low administrative capacity, particularly those classified as Areas of Strategic Intervention (ASI). According to the project’s evaluation, CWD I improved the quality of local development strategies, strengthened co-operation among municipalities and generated investment projects suitable for EU co-financing (Ewaluacja CWD, 2023).

Building on these results, the government launched CWD Plus (2022-23) and subsequently CWD III (2023-25), expanding support to over 76 partnerships covering the majority of Polish municipalities (Advisory Support Centre, 2025[51]). The later phases focus on embedding partnership-based planning practices and integrating strategic investment pipelines into regional and national programming frameworks. The CWD also promotes knowledge sharing through workshops, digital tools and an open database of partnership profiles and best practices.

Evaluations highlight that the programme has contributed to a shift from ad hoc co-operation toward structured inter-municipal partnerships. It has strengthened the capacity of local administrations to undertake joint diagnostics, manage multi-level governance processes and co‑ordinate the implementation of integrated territorial investments. In Lubelskie, seven partnerships brought together local governments and experts to foster sub-regional collaboration. They sought common solutions to local challenges, identified shared development potentials, and leveraged partners’ expertise in planning and implementing joint projects.

Source: (OECD, 2022[52]; Ministry of Funds and Regional Policy, 2024[50]).

OECD recommendations for developing a sound institutional framework for inter-municipal co-operation

Drawing on the analysis of country experiences and governance practices presented in this chapter, a set of recommendations emerges for effectively designing and implementing inter-municipal co-operation. These recommendations focus on aligning responsibilities, territorial scales, institutional forms and support mechanisms to ensure that co-operation delivers tangible benefits based on local needs. The checklist below synthesises these insights to strengthen the scope, design and operational effectiveness of inter-municipal co-operation.

Recommendations for developing a sound institutional framework for inter-municipal co-operation

• Define the sectors and functions most relevant for inter-municipal co-operation:

  • Align inter-municipal co-operation with the level of decentralisation and municipal responsibilities, ensuring that municipalities can only pool functions they legally hold.

  • Prioritise co-operation in services requiring scale or cross-boundary co-ordination (e.g. water, waste, transport, spatial planning, environmental management), where joint action brings clear efficiency and effectiveness gains.

  • Base the allocation of shared responsibilities on evidence-based analysis, including cost-benefit assessments and clear identification of spillovers, to avoid duplication and unnecessary complexity.

  • Clearly define and formally delegate competences to inter-municipal bodies, ensuring legal clarity, accountability and avoidance of overlapping responsibilities.

  • Provide flexibility in delegating municipal functions, including through hybrid models combining mandatory and optional competences, to balance coherence and local adaptability.

• Define geographic boundaries and governance approaches:

  • Align inter-municipal co-operation boundaries with functional areas, reflecting real service catchments, commuting patterns and economic linkages.

  • Adopt flexible and multi-scalar governance approaches, recognising that different services require different territorial scales rather than a single fixed structure.

  • Enable polycentric or networked co-operation arrangements, allowing multiple overlapping structures where needed, supported by strong co-ordination and accountability mechanisms.

  • Ensure adaptability of co-operation arrangements over time, to reflect demographic change, urbanisation and evolving service needs.

• Choose the appropriate forms of co-operation:

  • Match the form of co-operation to the nature and complexity of services, using contractual arrangements for simple or short-term tasks and more institutionalised structures for complex or strategic functions.

  • Promote a diversity of co-operation models (contractual, private-law and public-law), enabling municipalities to choose arrangements suited to their needs, capacities and policy objectives.

• Strengthen institutional, technical and administrative support:

  • Support inter-municipal co-operation through national and regional frameworks, including legal clarity, strategic guidance and financial incentives.

  • Provide technical assistance, digital tools and standardised templates to reduce transaction costs and help municipalities design and implement co-operation arrangements.

  • Strengthen administrative and technical capacity through training programmes, advisory services and secondment schemes, particularly for smaller or resource-constrained municipalities.

  • Encourage the establishment of dedicated teams within co-operation structures, ensuring continuity, co-ordination and professional management.

  • Foster learning, peer exchange and recognition mechanisms, including benchmarking, knowledge-sharing platforms and awards, to strengthen engagement and replicate successful practices.

2.5. Setting a solid fiscal framework

While legal provisions and institutional arrangements are fundamental enablers, they are not sufficient to ensure the emergence and effective functioning of inter-municipal co-operation. A well-designed fiscal framework should both remove disincentives and create incentives for co-operation, while ensuring that inter-municipal entities benefit from adequate financial autonomy, accountability, and solidarity mechanisms. It should also provide access to stable, predictable and diversified funding and financing sources, including fair municipal contributions, intergovernmental transfers, own-source revenues and investment financing tools. This chapter examines how fiscal arrangements can support the establishment, sustainability and effectiveness of inter-municipal co-operation.

Providing the right fiscal incentives to initiate and sustain inter-municipal co-operation

Fiscal frameworks shape incentives for inter-municipal co-operation and can either enable or hinder collaboration. Fiscal arrangements play a decisive role in determining whether municipalities engage in co-operation. When grant systems, equalisation formulas or revenue-sharing mechanisms reward fragmentation or small size, they can unintentionally discourage co-operation. In Czechia, for instance, the design of the grant system creates strong incentives for municipalities to remain small (OECD, 2023[53]), while in Lithuania, education subsidies based on student numbers have fostered competition rather than co-operation between municipalities (OECD, 2024[7]). In addition, limited municipal fiscal autonomy, particularly in centralised systems, can constrain municipalities’ ability to initiate and sustain joint initiatives. Conversely, greater fiscal flexibility and predictable funding strengthen co-operation by enabling cost-sharing, long-term planning and mutual trust among municipalities.

Removing fiscal disincentives is a prerequisite for effective inter-municipal co-operation. Fiscal barriers can arise from both revenue and expenditure sides. On the revenue side, municipalities may risk losing per-capita grants or equalisation shares when transferring competences to joint structures, or face reduced control over tax revenues and user charges when these are shared. On the expenditure side, co-operation may entail additional financial obligations, including contributions to common services or investments. Complex administrative requirements and reporting rules can further increase the perceived costs of collaboration. Together, these factors may discourage municipalities from co-operating, even when such arrangements would generate efficiency gains. Addressing these challenges requires reviewing and adjusting fiscal frameworks to remove implicit penalties on co-operation, ensuring that grant and equalisation systems remain neutral, or supportive, towards municipalities that pool resources, and simplifying procedures to reduce transaction costs.

Alongside removing disincentives, dedicated financial incentives can help initiate and sustain co-operation (Figure 2.4). In the short-term, targeted subsidies can support the creation and development of inter-municipal arrangements by covering initial or transition costs. These incentives are particularly important in overcoming the high transaction, co-ordination and set-up costs that often deter municipalities from entering co-operation. Several countries have established such incentives, for example Croatia, Czechia, Poland, and Slovenia. In federal countries, they are often established by state governments like in Austria and Germany (Box 2.13). More broadly, temporary grants and incentives have also been widely used in countries such as France prior to the 2010 reform, where special grants and tax regimes helped encourage municipalities to engage in co-operation by offsetting initial costs.

Figure 2.4. Financial incentives for inter-municipal co-operation

Source: OECD elaboration.

The 2025 Implementation Report of the OECD Recommendation on Effective Public Investment Across levels of Government confirms that financial and non-financial incentives to encourage inter-jurisdictional co-operation remain extremely relevant (OECD, 2025[54]). For 13 out of 21 Adherents that answered this question, the national level government offers financial incentives for inter-municipal co-operation – yet only in three regions offer such incentives (Figure 2.5).

Figure 2.5. Incentives for inter-jurisdictional co-ordination

Does your country have any of the following incentives to facilitate inter-jurisdictional co-operation?

Note: Total respondents: 28

Source: OECD 2024 Survey on the Implementation of the Recommendation of Effective Public Investment Across Levels of Government (OECD, 2025[54]).

Box 2.13. Examples of financial incentives for inter-municipal co-operation

• In Croatia, municipalities entering into one or more co-operation agreements are eligible for national co-funding covering up to 75% of costs related to shared administrative tasks, such as establishing joint administrative departments or sharing staff. Municipalities that co-operate to deliver public services may also receive co-funding of up to 25%. Both types of support are available for a period of up to five years following the signing of a co-operation agreement. According to interviews with local stakeholders, since the introduction of these grants in 2022, the Ministry of Finance has approved inter-municipal co-operation agreements for 132 cities and municipalities - nearly one quarter of all local governments in the country (OECD, 2024[37]).

• In Czechia, the government has introduced a special state subsidy to encourage the creation of the new “Communities of Municipalities” or the transformation of existing Voluntary Associations of Municipalities (VAMs) into this new co-operation model, launched in 2023. In addition to this national subsidy, the law now allows regions to provide optional financial support and enables Communities to access a broader range of subsidies, including EU funds, an opportunity that was not previously available to VAMs (Ministry of Interior of Czechia, 2025[33]).

• Slovenia has experienced a significant expansion of intermunicipal co-operation since 2005, when the government introduced a financial incentive covering 50% of staff costs for joint management bodies. The Ministry of Public Administration actively promotes co-operation under the “joint administration” model through a dedicated state subsidy that co-finances the salaries of local government employees working in these shared structures. Municipalities participating in joint municipal administrations may receive between 30% and 55% of salary and employment-related costs, plus an additional 20% for other eligible expenses. The level of state co-financing depends on the number of municipalities involved (minimum three) and the range of tasks performed, with each additional task increasing support by 5%. According to the Ministry of Public Administration, total state support for joint municipal administrations reached EUR 10 million in 2024. This mechanism allows participating municipalities to reduce operational costs substantially while improving administrative efficiency. (CoE - Congress of Local and Regional Authorities, 2025[55]).

• In Austria, Länder have introduced programmes to encourage local authorities to modernise services and adopt innovative approaches, with all Länder now offering incentives to promote inter-municipal co-operation. In several cases, Länder even link certain transfer payments within the fiscal equalisation system to participation in inter-municipal co-operation arrangements. At the federal level, the 2020–2024 programme further supported co-operation by proposing the abolition of VAT on inter-municipal arrangements to make them more attractive (LOGOV/KDZ, 2021[56]).

• In Germany, several Länder – such as Rhineland-Palatinate – provide “start-up” grants (Anschubfinanzierung) to co-finance the initial costs of establishing inter-municipal co-operation arrangements, including feasibility work and early operational expenses. Similar approaches can be observed in Central and Eastern Europe

Some countries also make inter-municipal co-operation a gateway to funding via their grant systems, in which co-operation is incentivised through eligibility rules, preferential access to grants, or the possibility to submit joint applications (Figure 2.4). Spain provides a particularly clear illustration of this approach at the regional level. In Castilla y León, dedicated subsidies support investments by “Mancomunidades de Interés General (MIG)”, making inter-municipal entities themselves the direct beneficiaries of public funding. In Galicia, the “Fondo de Cooperación Local” explicitly allows municipalities to apply jointly or through formal co-operative structures, embedding collaboration as a pathway to access resources, while EU regional funds are also prioritised for inter-municipal projects. Similarly, in Castilla-La Mancha, regional co-operation funds are designed to finance both individual municipalities and mancomunidades, thereby normalising inter-municipal structures as standard recipients of public investment. Comparable approaches can also be observed in countries such as Estonia and Norway, where additional transfers are provided for joint investments, and in Switzerland, where cantons use supplementary transfers, temporary subsidies or enhanced co-financing conditions to favour collaborative projects.

EU and territorial funding instruments can also act as catalysts of co-operation but require long-term anchoring (Figure 2.4). Instruments such as Community-Led Local Development (CLLD), LEADER Local Action Groups (LAGs), Interreg, Integrated Territorial Investments (ITIs) and their urban versions (SUDAs) are designed to encourage joint planning and implementation of integrated development strategies across municipalities and local stakeholders (Box 2.15). In Poland, for example, the use of EU territorial development instruments has been central to Poland’s territorial strategy and promotion of joint projects. Poland has progressively introduced financial incentives for municipalities within functional urban areas, particularly through EU-supported instruments such as Integrated Territorial Investments, requiring them to develop joint strategic plans to access funding. Such targeted incentives help municipalities overcome political and transaction costs, especially when provided from the planning phase, and encourage co-operation at the scale where development challenges are most effectively addressed. Slovakia also continues to make extensive use of EU-supported territorial co-operation instruments in the 2021–27 programming period, with a stronger emphasis on integrated, place-based approaches. In the Banská Bystrica region for example, LAGs involve 393 municipalities, supporting joint projects in areas such as tourism and local services. At the same time, co-operation has been reinforced in urban and regional contexts through ITIs is and SUDAs, as part of the Program Slovensko 2021-27. In BBSK, the system relies on 4 functional urban areas to foster co-operation among municipalities within each FUA to lead local strategies, plan and deliver joint investments focusing on sustainable mobility, green infrastructure, and social inclusion (OECD, 2025[3]). In Italy, EU Cohesion Policy funds have also been used to structure inter-municipal co-operation through the National Strategy for Inner Areas (SNAI) (Box 2.14).

Box 2.14. Inter-municipal co-operation through place-based strategies in Italy: the National Strategy for Inner Areas (SNAI)

Italy’s National Strategy for Inner Areas (Strategia Nazionale per le Aree Interne – SNAI) provides a prominent example of inter-municipal co-operation embedded in a place-based development approach. Launched in 2014, SNAI targets peripheral and sparsely populated areas facing demographic decline, limited access to services and economic marginalisation.

A core feature of the strategy is the requirement for municipalities to work together at the scale of functional areas, typically grouping several small municipalities into project areas. These inter-municipal partnerships jointly design and implement local development strategies, combining investments in essential services (e.g. health, education, mobility) with initiatives to support local economic development.

SNAI is co-financed through EU Cohesion Policy funds and national resources, with funding conditional on the preparation of integrated territorial strategies and governance arrangements involving multiple municipalities and levels of government. By encouraging municipalities to pool resources and co-ordinate actions, the initiative strengthens administrative capacity, improves service provision and promotes more coherent territorial planning in areas where individual municipalities would lack the scale to act alone.

Source: (OECD, 2023[57]; Agenzia per la Coesione Territoriale, 2025[58]).

While these tools provide valuable financial incentives and experimentation platforms, their project-based nature can limit sustainability if not embedded in permanent governance. These instruments can provide critical financial incentives and strategic frameworks that enable local actors to experiment with joint planning, service delivery, and development initiatives. At the same time, OECD analysis shows that such instruments are often project-based and short-term, which can limit their long-term impact and institutional sustainability. When relied on in isolation, they may risk framing co-operation as temporary and externally driven, rather than as a permanent feature of territorial governance. To strengthen their contribution, territorialised instruments are therefore most effective when used as stepping stones towards more structured, legally anchored, sustainably funded forms of inter-municipal co-operation, embedded within permanent governance arrangements (OECD, 2025[3]).

Box 2.15. EU instruments to foster municipal co-operation culture and practices

The following instruments are tools for inter-municipal co-operation, providing strategic frameworks and financial incentives to experiment with joint planning, service delivery, and investment. They are effective in fostering a culture of co-operation and encouraging municipalities to work together toward shared objectives. Key instruments include:

• Local Action Groups (LAGs) implementing Community-Led Local Development (CLLD) in rural areas under the LEADER initiative. These partnerships bring together municipalities, NGOs, businesses, and citizens to implement local strategies funded by EU rural development programmes. LAGs enable municipalities to collaborate on projects such as tourism infrastructure, small-scale public facilities, and local entrepreneurship initiatives, fostering joint planning and local ownership.

• Integrated Territorial Investments (ITIs) are an EU Cohesion Policy instrument that supports integrated, multi-sectoral development strategies across functional areas. By bundling resources from several EU funds - primarily the ERDF, ESF+ and the Cohesion Fund - ITIs enable municipalities and regions to jointly address challenges that cross administrative boundaries, such as mobility, environmental management or labour market integration. ITIs designate an intermediary body, often an inter-municipal or regional authority, to co‑ordinate the strategy and select projects. This approach promotes place-based investment, strengthens co-operation among municipalities and local stakeholders, and improves the coherence of territorial development efforts.

• Sustainable Urban Development Areas (SUDAs), implemented through Functional Urban Areas, provide a platform for Integrated Territorial Investments (ITI) in urban contexts. Each SUDA operates under an Urban Co-operation Council that selects and prioritises projects in areas like sustainable mobility, green infrastructure, social inclusion, and cultural revitalisation. SUDAs help municipalities align local strategies with regional and EU policy priorities, promoting co-operation across urban and surrounding areas.

• INTERREG programme supports inter-municipal and cross-border co-operation, facilitating joint projects in sectors such as tourism, environment, mobility, and cultural heritage. These programmes help build trust, strengthen capacities, and create shared solutions to regional challenges, including in border regions.

Source: OECD elaboration based on EU instruments’ webpages.

Aligning fiscal incentives with co-operation objectives is a critical first step toward strengthening inter-municipal co-operation uptake and effectiveness. These financial mechanisms send a strong signal of support for collaboration and help overcome short-term financial barriers that often prevent municipalities from pooling resources and expertise. However, for such incentives to be effective, they should be designed with clear eligibility criteria and aligned with long-term goals to ensure that co-operation continues once the financial support phases out.

Enabling budget autonomy, solidarity and accountability

While basic inter-municipal co-operation arrangements can be financed directly by municipalities through contracts, the creation of more formalised co-operation requires solid, stable and sustainable fiscal foundations in order to plan and deliver shared services effectively and ensure that costs are allocated fairly among participating municipalities. This rests on key principles, which are examined in this section: (i) budget autonomy, stability and predictability (ii) financial accountability, transparency and control (iii) transparent cost-sharing formulas that reflect real service usage and capacity as well as fiscal solidarity mechanisms of fiscal solidarity to ensure equitable access and avoid free-riding.

Enabling budget autonomy, stability and predictability

Budget autonomy is a cornerstone of effective and sustainable inter-municipal co-operation. Budget autonomy implies that the inter-municipal co-operation entity, once it is created to provide services, has the authority to manage its own financial resources, including the capacity to receive dedicated revenues, negotiate and collect member contributions based on objective formulas and allocate expenditures according to jointly agreed priorities. For example, in Peru, Mancomunidades lack budget financial autonomy. They do not hold a budget and cannot execute expenditures themselves. Instead, a single municipality is designated as the spending authority, which creates weak incentives for co-operation, generates administrative burdens that fall disproportionately on the host municipality, and limits joint decision making. Small and unstable funding further undermines operational capacity, resulting in weak and fragmented inter-municipal co-operation (see Country Snapshot).

Budget autonomy also reduces dependence on ad-hoc political agreements or discretionary transfers that can undermine continuity and efficiency. Without their own financial resources and decision making authority, inter-municipal co-operation structures risk becoming dependent on unilateral contributions or politically contingent transfers, leading to instability, underfunding, and limited strategic capacity.

Budget stability and predictability strengthen long-term planning and the strategic capacity of inter-municipal co-operation bodies. Ensuring the long-term effectiveness of inter-municipal co-operation requires stability in membership and contributions and predictable multi-year funding. This also strengthens strategic planning and allows for multi-annual investment decisions. This also involves the capacity to adapt financing models as responsibilities evolve.

Ensuring financial accountability, transparency and control

Ensuring robust financial accountability and transparency is essential to sustain trust and legitimacy in inter-municipal co-operation. As inter-municipal entities gain budget autonomy and responsibility for service delivery, they must also be accountable for financial management and outcomes. Strong transparency mechanisms are therefore critical to maintain confidence among participating municipalities and ensure long-term sustainability.

Clear governance, reporting and control mechanisms are key to preventing financial risks and disputes. Effective frameworks should define financial responsibilities, establish transparent budgeting processes and require regular reporting, independent audits and harmonised accounting standards. These tools help reduce mismanagement risks, clarify liabilities and strengthen financial discipline. Compatibility with national fiscal rules - particularly those governing borrowing, debt limits and balanced-budget requirements - is also essential for maintaining financial integrity and sustainability.

Strengthening democratic oversight and communication enhances accountability and public trust. Effective accountability also depends on strong decision making structures, adequate democratic oversight and open communication with citizens, including public reporting on performance and service quality. As inter-municipal co-operation entities expand their roles and handle more complex tasks, these safeguards become increasingly important.

Ensuring solidarity across member municipalities

Embedding fiscal solidarity in cost-sharing arrangements is essential to ensure fairness and sustainability in inter-municipal co-operation. Budget autonomy should be complemented by clear and equitable cost sharing arrangements and mechanisms that account not only for service usage but also for differences in fiscal capacity across municipalities. This is particularly important in functional areas where central municipalities bear additional “centrality costs” by providing services and infrastructure used by surrounding populations, often without full compensation, leading to structural imbalances and inequities. Central municipalities can also bear the costs of negative externalities such as pollution, congestion, higher security and cleaning costs, social service demand, opportunity costs (loss of productive land uses), etc. In Wisconsin, United States, for example, central cities run structural deficits while suburbs are overcompensated. In Spain, recent work confirms that central cities incur additional costs related to centrality charges (Sampedro and Garcia, 2022[59]) (Box 2.16).

Box 2.16. Centrality and capital costs in urban areas: policy watch for Spain

A recent study revisits the fiscal impacts of urban centrality, examining whether central cities bear disproportionate costs for services used by non-residents without receiving equivalent revenues. Drawing on both theoretical and empirical literature, as well as policy analysis in Spain, the study finds that non-residents account for an estimated 9% to 24% of municipal expenditure in Spanish central cities, with even higher shares in large metropolitan areas. Case studies such as Santiago de Compostela and Santa Cruz de Tenerife point to significant uncompensated annual costs, ranging from EUR 3 million to EUR 11 million depending on the methodology used. Broader evidence also shows that capital cities often face structural fiscal pressures due to tax exemptions on public buildings and the replacement of productive activities with administrative functions, while incurring higher costs related to infrastructure, security, heritage preservation and social services.

The study further highlights that, although various countries have introduced mechanisms to address these imbalances – such as special fiscal regimes, enhanced taxing powers, intergovernmental transfers or metropolitan governance reforms – Spain lacks a consistent national framework to compensate for centrality costs. Existing arrangements are often ad hoc, politically driven and uneven across territories, resulting in fluctuating and insufficient financial support for central cities.

Source: (Sampedro and Garcia, 2022[59]).

Addressing spillovers and centrality costs is critical to maintaining trust and balanced co-operation. Without adequate compensation, central municipalities may shoulder disproportionate financial burdens while neighbouring municipalities benefit from shared services. Inter-municipal co-operation emerges as one of the most effective and widely accepted solutions. Shared service provision, inter-municipal consortia, and metropolitan bodies can reduce unit costs, align cost-sharing with actual service usage, and improve efficiency. However, its effectiveness depends on well-designed, binding financial arrangements and stable funding mechanisms (Slack, 2019[60]).

Introducing transparent equalisation and compensation mechanisms strengthens equity and long-term viability. To address these gaps, a few OECD countries have introduced inter-municipal equalisation mechanisms or fiscal solidarity arrangements. Designing transparent compensation formulas, pooling specific taxes at the inter-municipal co-operation level, or setting up inter-municipal equalisation funds are options which can be considered. In addition, effective arrangements should reflect not only population and fiscal capacity but also commuting patterns, service demand and territorial dynamics. Examples include France’s multiple internal compensation instruments (Box 2.17) and Finland’s “ability-to-pay” contributions, where wealthier municipalities contribute more to shared structures.

Box 2.17. Intra-EPCI solidarity mechanisms in France

France has developed one of the most comprehensive and structured systems for financing inter-municipal co-operation, centred on EPCI endowed with their own taxation powers. To ensure fair and balanced contributions among member municipalities, France has established a system based three financial instruments.

• The first is the compensation allocation (attribution de compensation – AC), which guarantees budget neutrality when competences are transferred. When a municipality transfers a responsibility to the EPCI, it also transfers the associated revenues, and the AC adjusts for the difference between the revenue transferred and the expenditure assumed. Municipalities pay the EPCI when the latter takes on more costs than revenues, and receive payments when they transfer more revenue than expenditure. This mechanism ensures that no municipality is financially disadvantaged by entering or expanding co-operation.

• A second internal mechanism is the single business taxation (Fiscalité Professionnelle Unique FPU), under which all business taxes are collected at the inter-municipal level rather than by individual municipalities. This pooled revenue forms a shared fiscal base that reflects the fact that economic activity typically benefits the wider functional area and not only the municipality where businesses are located. The pooled resources are then redistributed among municipalities through the AC and other equalisation tools.

• A third instrument, the community solidarity grant (dotation de solidarité communautaire - DSC), reinforces fiscal solidarity within the EPCI. Unlike the AC, which is strictly compensatory, the DSC is explicitly redistributive. Its purpose is to reduce disparities between municipalities and to compensate those that bear higher centrality-related costs, such as hosting key infrastructure or services used by residents from surrounding areas. The allocation formula, decided by the EPCI council, generally takes into account population, fiscal capacity, investment needs and central functions. Through this mechanism, EPCIs can address internal fiscal imbalances and strengthen cohesion across their territory.

Ensuring stable and diversified funding and financing for inter-municipal co-operation

A predictable and diversified fiscal framework is essential for inter-municipal co-operation to function effectively and sustainably. Inter-municipal co-operation can only deliver results when supported by stable and coherent funding arrangements that make collaboration financially viable. Once an inter-municipal co-operation body is established, it is necessary to secure recurrent and predictable funding streams to support day-to-day operations, the provision of services and the development of infrastructures.

Diversified revenue sources strengthen the financial resilience and capacity of inter-municipal co-operation bodies (Slack, 2019[60]). Inter-municipal bodies typically rely on a mix of funding sources, including municipal contributions, intergovernmental grants and subsidies, and own-source revenues such as user fees, taxes or asset income. Access to borrowing and partnerships with private actors can further expand financing options (Figure 2.6).

The range of available resources depends on the legal form and level of institutionalisation. More integrated public-law entities generally benefit from broader and more stable revenue bases than less formal or private-law arrangements. France has developed one of the most comprehensive systems for financing inter-municipal co-operation, with EPCIs having taxing powers. Italy also illustrates particularly well how financing possibilities vary across inter-municipal co-operation forms. While convenzioni mainly rely on financial relations agreed ex ante between member municipalities, more institutionalised forms such as unioni di comuni and consorzi have their own budgets and governing bodies, and may combine municipal transfers, higher-level grants and user charges and fees.

Figure 2.6. Main sources of funding and financing for inter-municipal co-operation

The range of funding and financing sources available depends on the inter-municipal co-operation legal structure

Source: OECD elaboration.

Insufficient and unstable funding remains a major constraint to effective inter-municipal co-operation. In many OECD countries, limited and unpredictable funding undermines operational capacity and sustainability, especially for less institutionalised co-operation arrangements. In Chile, for example, municipal associations operate as private-law entities and rely primarily on member contributions, which typically cover only basic operational costs. This limits their functioning and makes them highly dependent on competitive central government funding, constraining their ability to hire staff or expand activities (OECD, 2017[61]). A similar challenge exists in Czechia, where Voluntary Associations of Municipalities (VAMs) depend on member fees, but reluctance to increase contributions leads them to rely heavily on temporary external funding, such as state or EU funds, undermining financial stability. In Romania, the lack of dedicated funding mechanisms for Metropolitan Areas created under Law no. 246/2022 is a major weakness. Despite having legal personality, these entities depend on a mix of voluntary municipal contributions, state transfers and project-based or EU funding, without access to stable own-source revenues (OECD, 2025[14]). Comparable issues arise in Italy, where many unions and consortia remain structurally dependent on transfers from municipalities and higher levels of government. For example, the Unione dei Comuni Montani del Casentino relies predominantly on current transfers, with negligible tax-type revenues, illustrating the persistent financial dependence of many inter-municipal structures despite their formal autonomy (Unione Dei Comuni Montani Del Casentino, 2024[62]).

Designing fair and sufficient direct municipal contributions

Direct municipal contributions are a core and widely used financing source for inter-municipal co-operation. Municipalities commonly fund inter-municipal arrangements through financial transfers covering operating costs or specific shared services. This approach is prevalent across OECD countries such as Finland, Czechia and Romania, where municipalities typically use formulas based on population, service usage or fiscal capacity. In Romania, Law No. 246/2022 confirms that, in the absence of own-source revenues, inter-municipal structures rely mainly on municipal contributions alongside state transfers and project-based funding (Government of Romania, 2022[63]). However, over-reliance on municipal contributions – especially when politically difficult to increase – can undermine financial stability, as seen in Czech voluntary municipal associations (Sedmihradská, 2018[64]). A similar pattern exists in Italy, where many unions and consortia depend primarily on municipal transfers, often complemented by other sources. For example, the Consorzio Intercomunale del Novese dei Servizi Sociali combines municipal quotas with regional transfers, health co-financing and user fees, illustrating how local contributions often underpin broader multi-source financing models (Associazione Nazionale Comuni Italiani, 2000[65]).

Designing fair, transparent and predictable cost-sharing mechanisms is essential to ensure sustainability and trust. A key challenge lies in allocating costs among member municipalities in a way that reflects both benefits and capacities. A variety of models are used across OECD countries to distribute costs among member municipalities, each with distinct advantages and trade-offs depending on the type of service and local context. Contribution formulas vary widely and may be based on population, service demand, usage, territorial characteristics or fiscal capacity, often combined in hybrid models (Table 2.5). These approaches aim to balance equity and efficiency while avoiding free-riding and excessive administrative complexity.

A commonly recommended approach is to adopt a full-cost funding model that accounts for both direct and indirect costs of shared services, ensuring that municipalities contribute to the true cost of provision. Within this approach, different cost-sharing methods can be applied, notably the matching principle (linking contributions to actual service use) and population-based allocation, each offering specific advantages and trade-offs (Table 2.5). Other approaches include equal-share contributions, where municipalities pay identical amounts regardless of size or usage, and ability-to-pay models, which adjust contributions based on fiscal capacity. In practice, many inter-municipal arrangements increasingly rely on hybrid models – combining, for example, equal distribution of fixed costs with variable contributions based on population or service demand. These flexible approaches allow municipalities to balance equity, efficiency and predictability, and to tailor financial arrangements to their specific contexts, depending on the type of public service and intensity of collaboration. Within the founding agreements between member municipalities, they can also agree on the periodicity of costs-sharing revision (e.g. annual or multi-annual basis).

Reliable cost data and accounting systems are critical for effective cost-sharing arrangements. Regardless of the model chosen, all approaches depend on robust financial information and transparent accounting practices. In practice, the lack of reliable cost data remains a common challenge, complicating negotiations and potentially undermining the effectiveness and acceptance of inter-municipal co-operation arrangements.

Table 2.5. Possible cost-sharing models for shared-service provision

Cost Sharing Method	Description	Example use case	Likely benefits	Likely challenges
Full cost funding	All direct and indirect costs of shared services provision are included in the cost calculation.	Recommended general approach for shared services	Enables fair distribution of costs; clear accounting of all service-related expenses.	Complexity in calculating full costs; potential disagreements on cost allocations.
Matching principle	Costs are covered based on service usage by residents, aligning costs with benefits received. Recommended for services with users identifiable.	Health and social services	Fairness in cost distribution; costs linked directly to usage.	Budgetary risks; possible cost overruns if usage exceeds forecasts.
Population based cost sharing	Costs are shared based on the population of each municipality, simple but may lack incentives for cost control. Widely used for public goods.	Rescue services, advisory services	Simplicity in calculation; suitable for evenly distributed or hard-to-measure benefits.	Limited motivation for cost control; additional expenses from increased usage are distributed among all.
Alternative methods
Equal share contribution	Each member contributes an equal share of total costs, useful where benefits are equally distributed or hard to measure.	Joint public transport	Simplicity; equality in cost sharing irrespective of size or usage.	May not reflect actual service usage or need; potential for perceived unfairness.
Ability-to-Pay Contributions	Contributions are based on the economic strength of each municipality, promoting financial solidarity.	Regional policy councils in Finland	Equity in financial contribution; wealthier municipalities support more.	Complex to determine fair contributions based on economic strength; may require frequent reassessments.
Hybrid model	Combines methods based on specific circumstances and objectives, providing flexibility and promoting fairness in cost distribution.	Customisable to various shared services scenarios.	Adaptability to diverse needs; can facilitate combination of fairness and flexibility.	Requires careful planning and monitoring to ensure effective implementation.

Source: (OECD, 2024[7]).

Accessing grants and subsidies from higher levels of government

Intergovernmental grants and subsidies are key levers to support and scale up inter-municipal co-operation. Transfers and subsidies from central, regional or provincial governments – whether general-purpose, earmarked, equalisation-based, recurrent or one-off, or ad-hoc subsidies for specific projects – can significantly support both the establishment and operation of inter-municipal arrangements. Extending eligibility for such funding directly to inter-municipal bodies is a powerful policy tool to encourage municipalities to collaborate and invest jointly (see financial incentives). In addition, in several EU countries, inter-municipal entities can directly access cohesion policy funding (e.g. ERDF, ESF+, ITIs or cross-border programmes), which enables them to implement large-scale, multi-sectoral or infrastructure-intensive projects that would be difficult to undertake individually (Box 2.15).

National and regional governments play a decisive role in structuring and targeting financial support to inter-municipal co-operation. France provides a strong example, where EPCIs benefit from a wide range of recurrent grants supporting both operating and investment needs, as well as equalisation mechanisms (Box 2.18).

Box 2.18. France: a comprehensive grant system for EPCIs

French EPCIs receive a range of intergovernmental grants that play a crucial role in balancing their budgets and supporting investment. The most significant is the General Operating Grant (Dotation Globale de Fonctionnement - DGF), and more specifically, its inter-municipal component “inter-municipal co-operation grant” (Dotation d’Intercommunalité), which provides general-purpose funding based on factors such as population, level of integration, and socio-economic characteristics. EPCIs also benefit from earmarked grants supporting specific functions such as transport, waste management, digital infrastructure, urban renewal or environmental projects, often financed through regional, national, or EU programmes (e.g. ERDF). Moreover, recent reforms compensating for the loss of the residence tax have introduced VAT-based compensation allocations, ensuring revenue stability.

In addition, France has established in 2012 a national equalisation scheme which applies to inter-municipal co-operation bodies. This National Equalisation Fund for Municipal and Inter-Municipal Resources (Fonds national de péréquation intercommunal et communal - FPIC). The FPIC is the main horizontal equalisation instrument, redistributing a share of aggregated tax resources from wealthier to less affluent territories, with an annual volume of around EUR 1 billion since 2016. By calculating contributions and allocations based on the combined fiscal capacity of EPCIs and their member municipalities, the FPIC strengthens solidarity across territories and supports more balanced inter-municipal co-operation nationwide.

Source: OECD elaboration.

In Portugal, inter-municipal entities receive automatic transfers from the state budget defined as a fixed share of the municipal revenue-sharing fund (respectively 1% and 0.5%). Italy illustrates a more multi-layered system (Table 2.6). National annual transfers support jointly delivered services, according to a formula. A 2004 ministerial decree (DM 289/2004) awards each union a percentage (15-26%) of their certified associated-service expenditures (with higher percentages if 3+ services or certain core services are pooled). Regions also have dedicated funds. For example, regions such as Tuscany and Emilia-Romagna provide targeted funding and prioritise more integrated forms of co-operation (Regione Toscana, 2011[66]). In Spain, inter-municipal co-operation bodies can receive earmarked grants from the national government, although there is no separate share in national shared taxes. They also receive grants from the regional and provincial levels. In Valencia, the Valencian Ley 21/2018 mandates that the Generalitat and provincial councils “integrate mancomunidades in all strategic subsidy plans” and treat them like municipalities for aid purposes.

Well-designed grant frameworks should provide predictable, adequate and co-ordinated support across levels of government. Fragmented or insufficient funding – such as small or uncertain national transfers – can limit the effectiveness of co-operation. Aligning national and regional funding schemes, ensuring sufficient scale and stability, and clearly linking financial incentives to co-operation objectives are therefore essential to maximise impact and encourage municipalities to engage in durable collaborative arrangements.

Collecting non-grant revenues, including taxes and user fees

Expanding access to own-source revenues strengthens the financial autonomy and sustainability of inter-municipal co-operation. France stands out as the only OECD country where inter-municipal bodies (EPCIs) draw their financial autonomy primarily from their ability to receive local tax revenues. Their main tax resources include property taxes on built and undeveloped land (taxe foncière sur les propriétés bâties et non bâties), as well as local business taxation, notably the cotisation foncière des entreprises (CFE). Many EPCIs may also levy a tourist tax (taxe de séjour) in areas with significant visitor activity, allowing them to capture revenue from non-residents who benefit from local services. Following recent national tax reforms, especially the progressive abolition of the residence tax (taxe d’habitation), EPCIs now receive shared tax revenues and compensatory transfers, including VAT-based allocations, to maintain their revenue base. Together, these tax sources provide EPCIs with the capacity to fund shared services, infrastructure, and development strategies across municipalities.

User charges and fees are important complementary funding sources for intermunicipal co‑operation bodies, especially because they provide services and infrastructure that can be charged to users or because they own and manage assets. Depending on national legislation and delegated competencies, they may levy user fees and service tariffs for public transport, water supply and wastewater treatment, waste collection and disposal, district heating, parking facilities, or leisure and cultural amenities such as swimming pools, sports centres, and museums.

Private-law municipal companies – common in Finland, Belgium and other Nordic countries – are often financed largely through user charges and fees, operating on a full-cost or commercial basis. In Belgium, inter-municipal utilities such as Aquafin in Flanders or regional water associations recover costs through tariffs for water and sanitation services; Aquafin, for example, finances and operates wastewater infrastructure by charging municipalities and users (Aquafin, n/d[67]). In Italy, the legal framework also allows unioni to receive revenues from tariffs, service contributions and user payments linked to services. In practice, these sources often remain minor compared with transfers, but they can be significant in sector-specific consorzi, such as in social services, where user contributions are combined with municipal and regional financing (Associazione Nazionale Comuni Italiani, 2000[65]).

Leveraging assets and infrastructure can provide additional revenue streams and support strategic development. Inter-municipal bodies may also generate income from managing economic infrastructure (e.g. industrial zones, energy networks, broadband) or through property-related revenues such as leasing, concessions or asset sales. Some also receive dividends from equity participation in public or mixed-ownership companies, further diversifying their financial base.

Diversified own-source revenues enhance resilience, efficiency and incentives for better service delivery. By reducing dependence on municipal transfers and external funding, these revenue streams strengthen financial autonomy and encourage more efficient management of services and assets. Country experiences, such as in Finland, show that combining municipal contributions, grants and user fees can provide a balanced and sustainable financing model for inter-municipal co-operation. Italy also provides a wide range of revenue sources depending on the type of inter-municipal co-operation bodies (Table 2.6).

Table 2.6. Different types of revenue for inter-municipal co-operation bodies in Italy

Types of revenues	Resources	Co-operative forms most affected
Direct municipal contributions	Current transfer revenues or delegated spending via lead municipality	Unioni, consorzi; indirectly convenzioni
Regional grants and delegated-function financing	Current/capital transfers; often sectoral (social services, local functions)	Unioni, consorzi; sometimes metropolitan cities
Central government “associativismo” contributions	Targeted annual transfer; certification-based; proportional allotment if oversubscribed	Unioni and comunità montane
FSC equalisation (municipal level)	Primarily municipal resource, enabling municipal co-financing of inter-municipal co-operation	All, via municipal fiscal space
Province & metropolitan “own taxes” (RC Auto, IPT, TEFA)	Tax revenue	Città metropolitane (and provinces)
User fees & co-payments	Extra-tributary revenue	Unioni, consorzi; sometimes metropolitan services
EU funds (ERDF/ESF+/RRF)	Transfers/capital funding; project-based	All, but capacity-dependent
Special-purpose entities (in-house companies, public-owned firms) and PPPs	Service contracts, concession models, investment vehicles	Often metropolitan/province & larger inter-municipal co-operation

Source: (Dipartimiento per gli Affari Interni e Territoriali, n.d.[68]).

Strengthen access to external financing

Access to investment financing is essential for inter-municipal co-operation to deliver infrastructure and long-term development projects. Investment financing is a central dimension of inter-municipal co-operation, particularly in capital-intensive sectors such as water, waste, transport and digital infrastructure. However, inter-municipal entities often face barriers in accessing external finance due to their legal status, limited borrowing capacity or unclear arrangements for sharing financial liabilities among member municipalities.

Clear fiscal rules and liability arrangements are key to unlocking borrowing capacity. Where authorised, inter-municipal co-operation bodies can access borrowing to finance multi-year investments, including loans from public development banks or commercial lenders, and in some cases access to capital markets through bond issuance. The ability to borrow depends critically on fiscal rules and clarity regarding how risks and liabilities are distributed among participating municipalities (Box 2.19). Access to credit is also facilitated when legal frameworks clearly define repayment responsibilities and the distribution of risks among participating municipalities.

Box 2.19. Borrowing and bond issuance by French EPCIs

In France, EPCIs have the legal capacity to borrow, primarily to finance capital investment rather than operating expenditure. Like municipalities, they are subject to the “golden rule” of local public finance, meaning that loans may only be used to fund infrastructure and long-term assets, ensuring repayment capacity over time. EPCIs generally benefit from stronger borrowing power than many individual municipalities due to their larger and more diversified tax base, recurrent grants, and greater financial stability, which improves their credit profile. Their main lenders include public institutions such as the Caisse des Dépôts et Consignations and the Banque Postale, regional banks, and increasingly the European Investment Bank (EIB) for major infrastructure projects. Many EPCIs are also members of the Agence France Locale (AFL), the co‑operative financing institution created and owned by local authorities in France, which enables them to access borrowing on the financial markets under favourable conditions and to strengthen their financial autonomy through a joint, locally governed funding mechanism.

Large EPCIs can also issue bonds directly, drawing on their own creditworthiness and investment capacity. Several bodies have done so in recent years, including Lyon Métropole, which issued a green bond to finance sustainable transport and energy projects, Bordeaux Métropole, which has repeatedly accessed the bond market for major infrastructure investments, and Lille Métropole, which issued a long-term bond to support urban development and mobility initiatives.

Borrowing enables EPCIs to undertake strategic investments in transport, water and wastewater systems, waste management, digital infrastructure, and economic development projects that would often be unattainable for member municipalities individually. However, access to debt also reinforces the need for robust financial governance, multi-annual planning, and transparent cost-sharing mechanisms among participating municipalities to ensure equitable repayment responsibilities.

Source: (Direction Générale des Collectivités Locales, n.d.[69]).

Pooled financing institutions can enhance creditworthiness and reduce borrowing costs for inter-municipal entities. In addition to borrowing, several OECD countries have established collective financing mechanisms that raise funds on capital markets and lend to municipalities and inter-municipal bodies under favourable conditions. Examples include France’s Agence France Locale (AFL) and Nordic institutions such as Kommunekredit (Denmark), Kommuninvest (Sweden) and MuniFin (Finland). These systems allow especially smaller or less creditworthy entities to benefit from higher credit ratings and lower financing costs than they could obtain individually.

Engaging with private sector through in public-private partnerships

Public–private partnerships can expand investment capacity for inter-municipal co-operation when properly governed. Inter-municipal co-operation entities may engage in public–private partnerships (PPPs) to finance, develop and operate infrastructure or services, particularly for complex or capital-intensive projects. These arrangements can provide access to additional funding sources and technical expertise, but their effectiveness depends on well-designed contracts that ensure transparent governance, appropriate risk-sharing and strong public oversight. Strengthening access to such financing instruments, alongside robust safeguards, is essential to support long-term, strategic investments at the inter-municipal scale.

OECD recommendations for developing a solid fiscal framework for inter-municipal co-operation

Drawing on the analysis of fiscal frameworks, country experiences and policy practices presented in this chapter, a set of recommendations emerges to support the design of effective fiscal conditions for inter-municipal co-operation. These recommendations focus on aligning incentives, funding mechanisms and financial governance with co-operation objectives, ensuring that collaboration is both feasible and sustainable over time. The checklist below synthesises these insights to establish or reform fiscal frameworks that strengthen both the uptake and long-term viability of inter-municipal co-operation.

Checklist for developing a solid fiscal framework for inter-municipal co-operation

• Providing the right fiscal incentives to initiate and sustain inter-municipal co-operation

  • Align fiscal frameworks with co-operation objectives by ensuring that grants, equalisation systems and revenue-sharing mechanisms do not reward fragmentation or penalise municipalities that co-operate.

  • Remove fiscal disincentives to co-operation by avoiding loss of revenues when competences are pooled, limiting additional financial burdens, and simplifying administrative and reporting requirements.

  • Introduce targeted start-up incentives (e.g. temporary grants, co-funding, tax exemptions) to cover initial transaction, co-ordination and investment costs of inter-municipal co-operation.

  • Use grant systems strategically to promote co-operation by making inter-municipal collaboration a condition or advantage for accessing some public funding and investment programmes.

  • Leverage EU and territorial funding instruments as catalysts while anchoring them in permanent governance and funding frameworks to ensure long-term sustainability.

• Enable budget autonomy, solidarity and accountability

  • Ensure budget autonomy for inter-municipal entities by allowing them to manage revenues, allocate expenditures and plan investments independently.

  • Provide stable and predictable and multi-annual funding to support long-term planning, infrastructure development and continuity of service delivery.

  • Design fair, transparent and flexible cost-sharing mechanisms based on service use, population, fiscal capacity or hybrid models, supported by reliable cost data.

  • Embed fiscal solidarity mechanisms (e.g. equalisation schemes, compensation formulas, shared taxes) to address territorial imbalances and centrality costs.

  • Strengthen financial accountability, transparency and control to maintain trust through clear governance rules, standardised accounting, regular reporting, audits, democratic oversight and compatibility with national fiscal rules

• Ensure stable and diversified funding and financing for inter-municipal co-operation

  • Design fair and sufficient direct municipal contributions and ensure access to grants and subsidies from higher levels of government, including EU funding to enhance resilience

  • Expand access to own-source revenues where appropriate (e.g. tariffs, fees, taxes) to strengthen fiscal autonomy and incentives for efficient service delivery.

  • Facilitate access to borrowing and pooled financing mechanisms by clarifying liability-sharing among municipalities, supporting pooled financing institutions to reduce costs and clear fiscal rules.

  • Promote well-regulated public–private partnerships (PPPs) to mobilise additional investment while ensuring transparency, risk-sharing and public control.

References

[51] Advisory Support Centre (2025), About the CWD initiative, https://doi.org/cwd.info.pl.

[58] Agenzia per la Coesione Territoriale (2025), National strategy for Inner Areas (SNAI), https://www.agenziacoesione.gov.it/strategia-nazionale-aree-interne/?lang=en.

[67] Aquafin (n/d), Aquafin, https://www.aquafin.be/en/about-us.

[4] Assemblée des Communautés de France (2019), Concerter à l’échelle intercommunale.

[65] Associazione Nazionale Comuni Italiani (2000), Decreto legislativo di 18 agosto 2000 n267 sulle Unioni di Comuni.

[25] Bakoš, E. et al. (2021), “The perception of inter-municipal cooperation by local officials and managers”, Central European Journal of Public Policy, Vol. 15/1, pp. 1-14, https://doi.org/10.2478/cejpp-2021-0002.

[23] Butt, K. et al. (2020), Local government co-ordination: metropolitan governance in twenty-first century Australia,, AHURI Final Report No. 352, Australian Housing and Urban Research Institute Limited, Melbourne,, https://www.ah.

[42] CCDR-Norte (2024), CCDR-NORTE signs contracts for territorial development and cohesion with Intermunicipal Entities of the Region, https://www.ccdr-n.pt/noticia/home/ccdr-norte-assina-contratos-para-o-desenvolvimento-e-coesao-territorial-com-entidades-intermunicipais-da-regiao.

[46] CEMR (2019), National associations of local and regional governmenst in Europe,, https://doi.org/chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://ccre-cemr.org/wp-content/uploads/2024/04/CEMR_study_association_local_government_EN.pdf.

[48] CNFPT (2025), Home page, https://www.cnfpt.fr/.

[55] CoE - Congress of Local and Regional Authorities (2025), Monitoring of the application of the European Charter of Local SelfGovernment in Slovenia, https://search.coe.int/congress#{%22CoEIdentifier%22:[%2209000016808e600f%22],%22sort%22:[%22CoEValidationDate%20Descending%22]}.

[45] CoE - Congress of Local and Regional Authorities, (2007), Good practices in intermunicipal co-operation in Europe, https://rm.coe.int/1680746dea.

[13] CoE Congress of Local and Region Authorities (2007), The Institutional Framework of Inter-Municipal Co-operation, https://rm.coe.int/the-institutional-framework-of-inter-municipal-co-operation/1680719b6a.

[17] Council of Europe (2010), Toolkit Manual for intermunicipal cooperation, https://rm.coe.int/imc-intermunicipal-co-operation/1680746ec3 (accessed on 21 March 2023).

[11] Council of Europe (1985), European Charter of Local Self-Government, https://rm.coe.int/168007a088.

[44] DGCL (2025), Guide de l’intercommunalité, https://www.collectivites-locales.gouv.fr/files/Institution/2.%20Structures%20territoriales/EPCI/guide%20interco%202025/guide%20interco%202025%20vf.pdf.

[68] Dipartimiento per gli Affari Interni e Territoriali (n.d.), La finanza locale, https://dait.interno.gov.it/finanza-locale.

[69] Direction Générale des Collectivités Locales (n.d.), Principes du recours à l’emprunt, https://www.collectivites-locales.gouv.fr/gerer-les-finances-publiques-locales/execution-des-recettes-et-des-depenses-locales/recettes-locales/emprunts-et-tresorerie/principes-du-recours-lemprunt.

[35] DNP (2023), National Development Plan, https://colaboracion.dnp.gov.co/CDT/Prensa/Publicaciones/plan-nacional-de-desarrollo-2022-2026-colombia-potencia-mundial-de-la-vida.pdf.

[19] Drive Sweden (n.d.), Cooperation on mobility for municipalities.

[15] Government of Norway (2026), A sustainable municipal sector: The municipal commission’s first interim report, https://www.regjeringen.no/no/dokumenter/nou-2026-1/id3145481/.

[63] Government of Romania (2022), Law No. 246 of 20 July 2022 on Metropolitan Areas.

[40] Government of Spain (1985), Basic Law on Local Government, https://www.boe.es/buscar/act.php?id=BOE-A-1985-5392.

[47] Intercommunalités de France (2025), Home page, https://www.intercommunalites.fr/.

[8] Intercommunalités de France (2022), , https://www.intercommunalites.fr/app/uploads/2022/10/ADCF_ETUDE_ENQUETE-ECO_22_WEB_10_22.pdf.

[16] KS (2025), Strengthened inter-municipal cooperation and municipal subcommittees, https://www.ks.no/globalassets/fagomrader/demokrati-og-styring/2025-10-31-rap-ks-fou-fiks-lundogco-menon-rev.pdf.

[30] LGiU (2025), Interview with Pauline Mulligan, Chief Executive of the LGMA, https://lgiu.org/blog-article/interview-with-pauline-mulligan-chief-executive-of-the-lgma/.

[29] LGMA & NOAC (2024), Summary of Local Government Performance Indicators 2024, https://cdn.noac.ie/wp-content/uploads/2025/09/NOAC-LGMA-Summary-2024.pdf.

[27] Local Government Management Agency (2024), LGMA annual report 2023, https://www.lgma.ie/en/publications/annual-reports/lgma-annual-report-2023.pdf.

[56] LOGOV/KDZ (2021), Local Government in Austria - Responses to Urban-Rural Challenges, https://www.kdz.eu/system/files/downloads/2021-12/LoGov_Austria_CR0.pdf.

[34] Ministry of Finance of the Republic of Estonia (2019), Administrative-Territorial Reform, https://www.agri.ee/sites/default/files/documents/2023-07/v%C3%A4ljaanne-2019-estonia-local-governments.pdf.

[50] Ministry of Funds and Regional Policy (2024), Advisory Support Center: supporting partnerships and the future of inter-local cooperation, https://www.gov.pl/web/fundusze-regiony/centrum-wsparcia-doradczego-wsparcie-partnerstw-i-przyszlosc-wspolpracy-miedzysamorzadowej.

[49] Ministry of Funds and Regional Policy (2020), Advisory Support Center – program description, https://www.gov.pl/web/fundusze-regiony/centrum-wsparcia-doradczego.

[33] Ministry of Interior of Czechia (2025), Community of municipalities, https://spolecenstviobci.gov.cz/.

[28] NOAC (2016), Local Government Shared Services Projects, https://cdn.noac.ie/wp-content/uploads/2016/05/NOAC-Shared-Services-Report.pdf.

[41] OECD (2025), Preparing for Demographic Change in Campania, Italy, OECD Publishing, Paris, https://doi.org/10.1787/071b9897-en.

[24] OECD (2025), Preparing for Demographic Change in Castilla y León, Spain, OECD Regional Development Studies, OECD Publishing, Paris, https://doi.org/10.1787/207044f7-en.

[38] OECD (2025), Preparing for Demographic Change in Castilla y León, Spain, OECD Regional Development Studies, OECD Publishing, Paris, https://doi.org/10.1787/207044f7-en.

[14] OECD (2025), Preparing for Demographic Change in Nord-Vest, Romania,, OECD Regional Development Studies, OECD Publishing, Paris, https://doi.org/10.1787/21b50ace-en.

[3] OECD (2025), Preparing for Demographic Change in the Banská Bystrica Region, Slovak Republic, OECD Regional Development Studies, OECD Publishing, Paris, https://doi.org/10.1787/62ab1acb-en.

[54] OECD (2025), Report on the implementation of the OECD Recommendation on Effective Public Investment Across Levels of Government.

[21] OECD (2025), Subnational governments in OECD countries: Key data (brochure), https://www.oecd.org/content/dam/oecd/en/topics/policy-issues/subnational-finance-and-investment/subnational-governments-infrastructure-finance-2025.pdf.

[2] OECD (2024), Building more resilient cross-border regions - Considerations in governance and partnerships, OECD Publishing, https://doi.org/10.1787/d5fd3e59-en.

[7] OECD (2024), Enabling Inter-Municipal Shared Service Provision in Lithuania: Proposed Legal and Institutional Framework and Piloting Approach in Tauragė+ Functional Zone, OECD Multi-level Governance Studies, OECD Publishing, Paris, https://doi.org/10.1787/f8ad6859-en.

[22] OECD (2024), Going Granular with Regional and Municipal Fiscal Data - OECD and EU countries, https://www.oecd.org/content/dam/oecd/en/publications/reports/2024/11/going-granular-with-regional-and-municipal-fiscal-data_9dc4aa1e/8a17c019-en.pdf.

[36] OECD (2024), OECD Economic Surveys: Colombia 2024, , OECD Publishing, Paris, https://doi.org/10.1787/a1a22cd6-en.

[32] OECD (2024), OECD Territorial Reviews: Brussels-Capital Region, Belgium, OECD Territorial Reviews, OECD Publishing, Paris, https://doi.org/10.1787/0552847b-en.

[31] OECD (2024), OECD Territorial Reviews: Brussels-Capital Region, Belgium, OECD Territorial Reviews: Brussels-Capital Region, Belgium,, https://doi.org/10.1787/0552847b-en.

[37] OECD (2024), Towards Balanced Regional Development in Croatia: From Strategy Design to Implementation, OECD Multi-level Governance Studies, Paris, https://doi.org/10.1787/3c0779cf-en.

[57] OECD (2023), OECD Regional Outlook 2023: The Longstanding Geography of Inequalities, OECD Publishing, Paris, https://doi.org/10.1787/92cd40a0-en.

[53] OECD (2023), Public governance review of Czechia - Towards a More Modern and Effective Public Administration - Chapter on regional and local governance, OECD Publishing, Paris, https://doi.org/10.1787/41fd9e5c-en.

[52] OECD (2022), Rethinking Regional Attractiveness in Lubelskie, Poland, OECD Publishing,, https://www.oecd.org/regional/rethinking-regional-attractiveness-of-lubelskie-poland-en.pdf.

[1] OECD (2021), Decentralisation and Regionalisation in Bulgaria: Towards Balanced Regional Development, OECD Multi-level Governance Studies, OECD Publishing, Paris, https://doi.org/10.1787/b5ab8109-en.

[6] OECD (2020), Delineating Functional Areas in All Territories, OECD Publishing, Paris, https://doi.org/10.1787/07970966-en.

[12] OECD (2019), Making Decentralisation Work: A Handbook for Policy-Makers, OECD Multi-level Governance Studies, OECD Publishing, Paris, https://doi.org/10.1787/g2g9faa7-en.

[61] OECD (2017), Making Decentralisation Work in Chile: Towards Stronger Municipalities, OECD Multi-level Governance Studies, OECD Publishing, Paris, https://doi.org/10.1787/9789264279049-en.

[26] OECD (2017), Multi-level Governance Reforms: Overview of OECD Country Experiences, OECD Multi-level Governance Studies, OECD Publishing, Paris, https://doi.org/10.1787/9789264272866-en.

[20] OECD-UCLG (2022), 2022 Report of the World Observatory on Subnational Government Finance and Investment – Key Findings.

[66] Regione Toscana (2011), Legge regionale 27 dicembre 2011, n. 68. Norme sul sistema delle autonomie locali..

[59] Sampedro, M. and A. Garcia (2022), “Centrality and Capital Costs in Urban Areas: Policy Watch for Spain”, Hacienda Pública Española / Review of Public Economics, https://doi.org/10.7866/HPE-RPE.23.1.3.

[64] Sedmihradská, L. (2018), “Inter-Municipal Cooperation in the Czech Republic: A Public Finance Perspective”, NISPAcee Journal of Public Administration and Policy, Vol. 11/2, pp. 153-170, https://doi.org/10.2478/nispa-2018-0017.

[18] Sénat (2025), Pour une intercommunalité de la confiance, au service des territoires, https://www.senat.fr/rap/r24-900/r24-9001.pdf.

[60] Slack, E. (2019), Metropolitan Governance, Principles and Practice, IDB, https://publications.iadb.org/publications/english/document/Metropolitan_Governance_Principles_and_Practice.pdf.

[9] SSG Sachsen (2022), Bericht zur Interkommunalen Zusammenarbeit im Freistaat Sachsen, https://www.ssg-sachsen.de/de/projekte/ikz/ikz-grundlagen/ikz-in-sachsen/bericht-der-servicestelle-ikz-zur-interkommunalen-zusammenarbeit-im-freistaat-sachsen-2022/2022-12-21-ikz-sachsen-ssg-bericht.pdf?.

[39] Toscano Gil Francisco (2025), “Las mancomunidades de municipios de interés autonómico”, Anuario de Derecho Municipal, https://revistasmarcialpons.es/anuarioderechomunicipal/article/view/toscano-las-mancomunidades-de-municipios-de-interes-autonomico/3500.

[43] UK Government (2024), English Devolution White Paper, https://www.gov.uk/government/publications/english-devolution-white-paper-power-and-partnership-foundations-for-growth/english-devolution-white-paper.

[62] Unione Dei Comuni Montani Del Casentino (2024), Conto di bilancio.

[5] Veenendaal, W. (2023), “Governing inter-municipal partnerships in the Netherlands”, Acta Politica, https://link.springer.com/article/10.1057/s41269-023-00295-6.

[10] Venice Commission (2016), COMPILATION OF VENICE COMMISSION OPINIONS CONCERNING CONSTITUTIONAL AND LEGAL PROVISIONS FOR THE PROTECTION OF LOCAL SELF-GOVERNMENT, https://www.venice.coe.int/webforms/documents/.