Around €100,000 of German tax-payers' money is paid to former combatants, their widows and orphans each year, according to left-wing political party Die Linke, who recently tabled a question on the matter in the Bundestag, Germany's national parliament.
"Even if the sum sounds small at €100,000, it's a scandal that the government to this day voluntarily compensates people who were involved in the Nazi war against the Soviet Union," Die Linke MP Andrej Hunko told The Local.
More than 47,000 Spaniards signed up to the Division Azul - Blue Division - to join Nazi troops fighting communism on Germany's eastern front between 1941 and 1944.
A pension agreement was struck by German Chancellor Konrad Adenauer with Franco in 1961 that saw the Blue Division combatants, their widows and orphans receive a pension from the state.
Last year the figure amounted to €107,352 split between 41 veterans, eight widows and an orphan.
"The agreement signed by Adenauer is valid to this day and clearly no government to this day has questioned it. The political signal that sticking to this contract sends out is crucial. For this reason, this agreement must be cancelled,” Hunko said.
In return, Spain agreed to pay a stipend to the widows of fallen airmen of Hitler's Condor Legion, who bombed Spain during the Civil War of 1936 and 1939 and most famously carried out the bombardment of the Basque town Guernica.
"It's an absolute disgrace to think the German government is still paying out to Nazi volunteers," MP Jon Iñarritu of the left-wing Basque party Amaiur, told The Local.
"It doesn't make sense, contravenes EU law and serves to humiliate victims of fascism," he said.
"It was my understanding that Germany had a completely different attitude when it came to historical memory and the rejection of fascism."
The Basque pro-independence coalition party EH Bildu said they would bring up the issue at European Parliament on Friday.
The German Ministry for Work and Social Affairs did not immediately respond to The Local's request for comment.