Soli under pressure: Federal Constitutional Court decides on the future of the contract

Soli under pressure: Federal Constitutional Court decides on the future of the contract

On March 26, 2025, the Federal Constitutional Court will decide on the constitutionality of the solidarity surcharge (Soli). This is a fee of 5.5 % to income and corporate tax as well as capital gains, which was introduced in 1995 to cover the financial requirements of German unity. The solidarity surcharge flows into the federal budget and is not earmarked. In recent years, the solos have only been due for high -earning, companies and investors. Around six million people and 600,000 corporations are currently subject to this tax obligation. radioguetloh.de reports that for taxable single ones of the solos from a taxable income of around 73.500 euros will be full from 114,300 euros.

The debate about the solidarity surcharge is sharply controversial. Six FDP politicians, among them Florian Toncar, have submitted a constitutional complaint (Az. 2 BvR 1505/20) and require the abolition of the solos for all taxpayers. They argue that the surcharge was unconstitutional after the end of the Solidar Pact II in 2019. The Solidar Pact II should cope with the consequences of the German division and to be regarded as unjustified after this date. The Federal Government, on the other hand, defends the Soli with the reference to the still existing costs incurred by reunification. This discussion about the tax burden comes at a critical time, since the future federal government may face considerable financial challenges.

legal and financial implications

Currently, almost 90 percent of private taxpayers no longer have a payment obligation, since only the upper income layers are affected. This regulation, which has been in effect since 2021, meant that only 10 % of taxpayers still have to pay the solidarity surcharge. A judgment of the Federal Constitutional Court could not only influence current tax policy, but also have significant financial effects. The solo revenues of 12.75 billion euros planned for 2023 could be at risk if the surcharge is tilted. Possible repayments could even be up to 66.5 billion euros, which would significantly burden future government financing. These figures make it clear that the topic goes far beyond tax aspects and has great social implications Tageschau.de .

The Federal Finance Court (BFH) had only decided in 2023 that the solidarity surcharge was constitutional as part of the years of assessment 2020 and 2021. The plaintiffs also complained of unequal treatment of various income recipients through the current legal framework. But the legal assessments are interpreted differently; While the BFH has spoken out for a continuation of the solos, the FDP plaintiffs are at the point of view that the basis for this tax no longer exists. In the coming weeks, the public discussion about the constitution of the solidarity surcharge could become more intensive, especially with regard to the upcoming decision of the Federal Constitutional Court, which is to be explained on March 26, 2025 haufe.de .