This is a fictional world so perhaps WW2 hasn't started yet.
There are certainly no swastikas in evidence that I can see where they should be, so maybe there's no Third Reich at all.
That said, that particular Reichskriegsflagge was designed by Hitler himself, so there's no reason to have any variations on it without one. And the fact that she's still named "Prinz Eugen" suggests that Anschluss happened regardless.
