In a recently published case, the Tax Court of Lower Saxony held that the continuous levy of the German solidarity surcharge (a 5.5%surtax on individual and corporate income tax, originally introduced to finance the German reunification) does not comply with the German Constitution – at least as from 2007. The case is now pending before the German Federal Constitutional Court. If the Court confirms that the continuous levy of the solidarity surcharge is unconstitutional, it could either nullify the law for 2007, so that the surcharge could no longer be levied (which would apply to all open tax assessments); or, alternatively, it could allow the continued application of the surcharge for a transitional period. In a 2006 decision relating to 2002, the German Federal Tax Court (BFH) held that the solidarity surcharge is in line with German constitutional law (see GTLN 8/2006). The Federal Constitutional Court will have to specifically accept a case which is based on a constitutional complaint in order to rule on the case. In the 2006 case, however, the Federal Constitutional Court did not accept the case so that no decision was rendered.
The BMF published official guidance clarifying that only preliminary assessments of the solidarity surcharge will be issued for years as from 2005. Taxpayers should review the assessments to ensure that they are preliminary with regard to the solidarity surcharge and should file written appeals against each tax assessment notice assessing a solidarity surcharge at least for the years since 2007 within the applicable one-month period, in case the solidarity surcharge is not assessed on a preliminary basis. Taxpayers who filed an appeal may consider applying for a suspension of proceedings based on the Federal Constitutional Court decision.
