The German state of Lower Saxony has spent about EUR41m to buy more VW shares and keep its voting stake at about a fifth, the state's finance ministry has said.

"We wanted to prevent the state's stake from sinking below 20%," a ministry spokeswoman told Reuters, confirming a report by the Hannoversche Allgemeine Zeitung newspaper.

VW employee share plans had threatened to pull the state's stake below the 20% level that has until now guaranteed that the state gets the maximum voting rights.

VW's home state used loans to buy the extra 367,000 shares to take its stake to 20.36%, the spokeswoman reportedly said.

That makes the state VW's second-biggest shareholder after Porsche, which has around 30.9% of the votes.

Germany's so-called Volkswagen Law, which limits any VW shareholder's voting rights in VW to 20%, has until now ensured a special role for Lower Saxony.

But the law has been challenged by the European Commission as an obstacle to the free flow of capital. A ruling from the European Court of Justice is due later this year.