German Phase-Out of Reunification Tax Unconstitutional: Attorneys

Our partner Dr. Oliver von Schweinitz was quoted in Bloomberg’s BNA International Daily Tax Report on the German government’s plans to partially phase out the nation’s across-the-board tax to support reunification and its undue burden on high-earners and businesses.

By keeping the levy in play for only certain societal groups, the tax has been turned into an additional form of income tax unilaterally issued by the government, presenting a constitutional violation – normally, changes to income taxation must be approved by both houses of parliament.

“The solidarity surcharge was absolutely legitimate for financing reunification, but now it’s raising more and more money that’s not being used for the purpose for which it was originally intended,” Hanno Kube, a professor of finance and tax law at the Ruprecht-Karls University of Heidelberg, who recently released a legal argument on the constitutionality of the government’s plans, told Bloomberg Tax April 26.


Good Intentions

Those plans for partially dismantling the solidarity surcharge are rooted in a political compromise between the center-left Social Democrats aand Chancellor Angela Merkel’s center-right Christian Democratic bloc, who formed a coalition in February, according Lothar Binding, the Social Democrats’ spokesman for fiscal policy in the Bundestag.


But Dr. Oliver von Schweinitz, a partner and tax attorney with GGV law firm in Hamburg, told Bloomberg Tax April 25 that judgement is the only relevant constitutional case on the matter, and that if far predates the solidarity surcharge’s 1991 implementation.

While the precedent provided the government with the legal “wiggle room” to issue levies in line with unforeseen financial challenges, such as the reconstruction of the East German states after reunification, it hardly applies to the recalibration of income tax brackets that the government ist suggesting with ist partial phase-out of the surcharge.

“The way they intend to have the phase-out is to differentiate between the rich and the poor, and that has the effect of basically infringing on the income tax tariff rates,’ he said. “If the government thinks we need to do something about the tax rate for impoverished individuals, then let them do that in the original Income Tax Act, and not in the add-on.”




  • Levy in place since 1991former East Germany’s economic infrastructure
  • Revamped tax would only apply to top 10 percent of earners


To read the complete article see attached PDF.


Dr. Oliver von Schweinitz  berät Unternehmer und Unternehmen an den Standorten Hamburg und Frankfurt im nationalen und internationalen Steuerrecht sowie im Wirtschafts- und Immobilienrecht.

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