The latest billion-dollar fine follows the car-maker being found guilty for similar offences in the U.S., where VW agreed to pay $US4.3 billion ($A5.7b) to resolve both a criminal and civil charge. "Volkswagen is committed to its responsibility for the diesel crisis and sees this as another important step to its management", it said in a statement.
Volkswagen's diesel emission scandal started back in September 2015, and it's still ongoing today.
In the spiralling scandal, Germany ordered Monday the recall of some 774,000 Daimler vehicles across Europe, citing illegal defeat devices.
This had led to 10.7 million cars "being advertised, sold to customers and placed on the market with an impermissible software function" in the US, Canada and worldwide between mid-2007 and 2015, the company said.
VW shares closed 0.1 percent higher at 159.78 euros.
Palestinians urge UN to condemn Israel over Gaza
While resolutions in the General Assembly are not legally binding, they carry political implication that can spark global action. Over 130 Palestinians have been killed by Israeli forces during the protests along the border with Gaza that began on March 30.
India vs Afghanistan; Dhawan provides solid start
Afghanistan's confidence stems from the exposure their ace spinners - leggie Rashid Khan and Mujeeb Rehman - have had in the IPL. Though they will be playing their first worldwide Test match, they could still have a meaningful impact on the result.
Arsenal target wants to leave Manchester United
Phlippe Lamboley, the agent of Anthony Martial , has confirmed that the forward wishes to leave Manchester United this summer. Martial is under contract for next season and the United also have the option for the 2019-20 season.
"We must plan for interruptions to production in the third quarter", VW chief executive Herbert Diess told workers.
Poetsch, also CEO of VW's majority stakeholder Porsche SE (PSHG_p.DE), is separately being investigated by prosecutors in Stuttgart over the same suspicions.
Hausfeld represents aggrieved VW owners and shareholders on both sides of the Atlantic.
"The Braunschweig public prosecutor issues an administrative order against Volkswagen AG in the context of the diesel crisis and imposes a fine of EUR1 billion on Volkswagen AG", the company said in a statement.
Finance chief Frank Witter will update investors on August 1 on the implications of the fine for the carmaker's cash position, alongside its second-quarter results, VW said.
"The fact that the criminal risk has now been dealt with is good news", said Arndt Ellinghorst, an analyst with Evercore ISI.