German prosecutors have opened an investigation into the co-leader of the far-right Alternative for Germany (AfD) on suspicion of violating party donation rules, a spokesman for the prosecutor's office in the city of Constance.

Alice Weidel's local party in the southern city on the shores of a lake of the same name is suspected of receiving a total 145,000 Swiss francs ($145,743.29) between July and September last year from a company based across the border in Switzerland.

German law prohibits parties from receiving donations from outside the European Union, of which Switzerland is not a member state. The donations were made shortly before Germany's national election last September, the spokesman said in a statement.

The development is a fresh setback for the anti-immigration AfD, which became Germany's largest opposition party after last September's national election but suffered lackluster results in two regional votes last month.

Given that Weidel is a lawmaker with impunity, prosecutors had to first notify her and the president of the Bundestag lower house before launching the investigation.

AfD went on the offensive in parliament yesterday in the wake of allegations of illegal donations made to the party from abroad. Weidel said the leaders of other parties should "come out of [their] glass houses and stop throwing stones" that would also hit them. She also acknowledged that her party had "made mistakes in dealing with electioneering donations" and said that all the funds had been returned to the Swiss firm. "Yes we made a mistake. We recognized it, reacted and paid the money back," she said.

A few other AfD members in Constance are also under investigation in the case. Prosecutors started looking into the party's election financing after a media consortium alleged that Weidel had received donations from a Swiss firm last year.