Soli ruling: for many, it’s not over yet

Background – What is the solidarity surcharge?

The solidarity surcharge, or “Soli” for short, is an additional amount that you pay on top of your regular tax. It was introduced in 1995 to help finance the costs of German unification. The surcharge is 5.5% of the assessed income tax, capital gains tax or corporation tax.

However, since 2021, only the top 10% of taxpayers, i.e. high earners and companies, have to pay it. Around 90% of people in Germany are exempt.

The latest ruling: Karlsruhe says yes to the solidarity surcharge

With its latest ruling from March 26, 2025 (Ref. 2 BvR 1505/20), the Federal Constitutional Court has ruled The solidarity surcharge is still constitutional.

Six FDP politicians had filed a lawsuit and argued that the original purpose, the reconstruction of the East, had ceased to exist since 2019. The court sees things differently.

The most important points of the judgment:

• According to the court, there is still a “special financing requirement” due to the reunification.
• The state may therefore continue to levy a supplementary tax such as the solidarity surcharge.
• BUT: The state must regularly check whether this additional requirement still exists. Permanent collection without cause would not be permitted.

Supplementary levy? This is a surcharge on income tax or corporation tax that the federal government may demand in addition in special cases – e.g. in the event of exceptional financial requirements.

What does that mean for you?

If you are one of the top earners or run a company, you will still have to pay the solidarity surcharge in the future.
The surcharge then applies to income tax, capital gains and corporation tax.
If you remain below the exemption limit, you will still not pay a cent.

Reactions from politics & business

Despite the ruling, the FDP & CSU are calling for the political abolition of the solidarity surcharge. They see the tax as an unnecessary burden for savers and companies.
The German government is pleased with the decision, the surcharge secures more than 12 billion euros per year, which is firmly planned in the budget.

If the court had ruled otherwise, up to 65 billion euros in solidarity surcharges would have been due for retroactive reimbursement.

Our tip for you:

If you continue to pay the solidarity surcharge, it’s worth taking a closer look at your tax structure:

• Can a different legal form (e.g. holding company) save money?
• Can investments or distributions be optimized for tax purposes?

Don’t want to pay more than necessary? Then get our first aid advice now. We’ll show you your options – book your first aid consultation now