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In article no. 98, we reported on constitutional challenges to the German income tax based on language contained in a 1995 ruling of the Federal Constitutional Court to the effect that the total tax burden on an individual could not constitutionally exceed roughly half of the individual's income (BVerfG BStBl II 1995, 655 - 22 June 1995).
On an appeal taken from denial of a request to stay collection of tax assessed pending resolution of this issue by the courts, the Federal Tax Court has held that the June 1995 ruling of the Federal Constitutional Court does not create sufficient doubt as to the constitutionality of the income tax laws as to justify a stay of collection, at least not with respect to the income tax in years through 1996 (DB 1998, 1798). Noting that the June 1995 ruling of the Federal Constitutional Court, which declared the net worth tax unconstitutional, required only prospective changes in this tax from 1997 onwards, the Federal Tax Court reasoned that there was no serious doubt as to the legality of the income tax for years through 1996.
The Federal Tax Court did not decide whether the remarks of the Federal Constitutional Court on which the taxpayer sought to rely were to be properly understood as a mere expression of opinion (obiter dictum) or as instructions to the legislature.
Disclaimer and Copyright
This article treats the subjects covered in condensed form. It is intended to provide a general guide to the subject matter and should not be relied on as a basis for business decisions. Specialist advice must be sought with respect to your individual circumstances. We in particular insist that the tax law and other sources on which the article is based be consulted in the original, whether or not such sources are named in the article. Please note as well that later versions of this article or other articles on related topics may have since appeared on this database or elsewhere and should also be searched for and consulted. While our articles are carefully reviewed, we can accept no responsibility in the event of any inaccuracy or omission. Please note the date of each article and that subsequent related developments are not necessarily reported on in later articles. Any claims nevertheless raised on the basis of this article are subject to German substantive law and, to the extent permissible thereunder, to the exclusive jurisdiction of the courts in Frankfurt am Main, Germany. This article is the intellectual property of KPMG Deutsche Treuhand-Gesellschaft AG (KPMG Germany). Distribution to third persons is prohibited without our express written consent in advance.
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