The Lower Saxony Tax Court has declared the solidarity surcharge unconstitutional: The 7th Senate of the Lower Saxony Tax Court suspended proceedings (7 K 143/08) and intends to obtain a renewed decision from the Federal Constitutional Court on the matter. The solidarity surcharge was originally introduced in 1991 to finance the reconstruction of eastern Germany. Since 1995 (introduction of the Solidarity Pact), it has been levied on a regular basis: initially at a rate of 7.5%, and since 1998 at 5.5% of wage and income tax. The Lower Saxony Tax Court has now ruled for the second time that the solidarity surcharge is not in accordance with the constitution. In the court's view, it violates the principle of equal treatment under Article 3 of the Basic Law. The court takes the position that the solidarity surcharge contravenes the principle of equal treatment because it is assessed in differing amounts in comparable situations — for example, in the case of foreign income or with regard to trade tax. It remains to be seen whether the Federal Constitutional Court will once again dismiss the referral. We will keep you informed.
Frequently asked questions
Frequently asked questions
Why does the Lower Saxony Tax Court consider the solidarity surcharge unconstitutional?
The Lower Saxony Tax Court (Finanzgericht Niedersachsen) sees the solidarity surcharge as violating the principle of equal treatment under Article 3 of the German Basic Law (Grundgesetz). The reasoning is that the surcharge is assessed in different amounts for comparable situations, for example in the case of foreign income or in interaction with the trade tax (Gewerbesteuer).
Since when has the solidarity surcharge been levied and at what rate?
The solidarity surcharge was introduced in 1991 to finance the reconstruction of eastern Germany. Since 1995, it has been levied regularly under the Solidarity Pact, initially at 7.5% and since 1998 at 5.5% of wage and income tax.
What is the case reference number of the referral proceedings on the solidarity surcharge at the Lower Saxony Tax Court?
The 7th Senate of the Lower Saxony Tax Court has suspended the proceedings under case reference 7 K 143/08. The court is referring the question of constitutionality to the Federal Constitutional Court for a decision.
What does the referral to the Federal Constitutional Court mean for taxpayers?
Until the Federal Constitutional Court issues its decision, it remains open whether the solidarity surcharge is in fact unconstitutional. In the meantime, taxpayers may consider keeping their assessment notices open with respect to the solidarity surcharge or filing an appeal in order to benefit from a possible ruling. This is already the second referral on this matter submitted by the Lower Saxony Tax Court.