Unsuccessful constitutional complaint against solidarity surcharge

No end to the solidarity surcharge! The Federal Constitutional Court has rejected the constitutional complaint against the solidarity surcharge. A bitter decision, especially for entrepreneurs and start-ups.

Karlsruhe, March 26, 2025 - In today's decision, the Second Senate of the Federal Constitutional Court did not accept for decision a constitutional complaint against the Solidarity Surcharge Act 1995 (SolZG 1995) in the version of the Act on the Reduction of the Solidarity Surcharge 1995 of December 10, 2019.

The solidarity surcharge introduced on January 1, 1995 constitutes a supplementary levy within the meaning of Art. 106 para. 1 no. 6 of the German Basic Law (GG). In its decision, the Senate states that such a supplementary levy presupposes a task-related additional financial requirement of the federal government, the main features of which are to be outlined by the legislature. The solidarity surcharge serves to cover the additional financial needs of the federal government as a result of reunification. An evident discontinuation of this additional requirement could not be established, so that there was no obligation to abolish the solidarity surcharge.

The complainants objected to the continuation of the solidarity surcharge obligation and the only partial reduction of the surcharge. In particular, they complained of a violation of the guarantee of property under Art. 14 Para. 1 GG and a violation of the general principle of equality under Art. 3 Para. 1 GG. However, the constitutional complaint was unsuccessful.

Judge Wallrabenstein agreed with the majority of the Senate, but wrote a special opinion on the grounds.

Facts of the case

The solidarity surcharge has been levied as a supplementary tax to income and corporation tax since January 1, 1995. Since 2021, it only applies to certain groups of income taxpayers and all corporate taxpayers. The assessment basis for the surcharge is the calculated income or corporation tax.

The Act on the Reduction of the Solidarity Surcharge 1995 significantly increased the exemption limits for income taxpayers from 2021. However, this regulation does not apply to all assessment bases.

The complainants objected to the unchanged levying of the solidarity surcharge in 2020 and the only partial reduction from 2021.

Key considerations of the Senate

The constitutional complaint was not accepted for decision.

The Federal Constitutional Court ruled that the Solidarity Surcharge Act 1995 was justified as a provision on the content and limits of the property guarantee. The financial constitutional requirements for levying the supplementary levy had not obviously ceased to exist even after 2020.

1. In 2019, the federal legislator had the legislative power to continue the solidarity surcharge. It could not be established that the additional financial requirement resulting from reunification had clearly ceased to exist.
2. The legislator has an obligation to monitor the continued entitlement to levy the solidarity surcharge. This was sufficiently taken into account in the legislative process.
3. The adjustment of the solidarity surcharge by the Act on the Reduction of the Solidarity Surcharge 1995 does not lead to the abandonment of its character as a supplementary levy. The legislator was allowed to take social aspects into account when graduating the surcharge.
4. The expert opinion in the proceedings showed that structural differences between East and West Germany also exist in the long term, which justify an additional financial requirement on the part of the federal government.

The Federal Constitutional Court emphasized that it was not its task to evaluate alternative financial policy concepts, but merely to examine whether the legislator's decision was clearly flawed. This was not the case.

The decision therefore confirms the legality of the continuation of the solidarity surcharge.

Commentary by Marc Nemitz from the perspective of founders and entrepreneurs

The decision of the Federal Constitutional Court is extremely regrettable from the perspective of entrepreneurs and founders. In addition to the obvious additional financial burden on the German economy, three major points of criticism were not sufficiently taken into account:

1. A breach of trust: originally, the solidarity surcharge was only to be levied for a limited period of time. However, since 1991 - with the exception of 1993 and 1994 - companies have been paying it continuously. In view of the fact that the GDR only existed for four decades, the question arises as to how long a so-called "reconstruction" should actually continue?
2. Unnecessary bureaucracy: The solidarity surcharge continues to create a high bureaucratic burden for companies. A more efficient solution would be to include the corresponding amounts in existing tax types such as capital gains tax, which would significantly reduce the administrative burden.
3. Misleading political communication: The claim that the solidarity surcharge has been abolished for 95% of the population remains unchallenged. In fact, it continues to affect investors who save privately for their retirement provision and consumers indirectly via consumption, as companies still have to pay the surcharge in full.

These points show that the solidarity surcharge in its current form is not only a financial burden, but also poses a profound problem in terms of economic policy credibility.