The German Constitutional Court in Karlsruhe is set to decide on the legality of the solidarity surcharge, a tax initially introduced to support the financial burdens of German reunification.

While the surcharge was removed for most citizens in 2020, it remains for high earners and corporations.

The court's decision could have significant implications for the federal budget, which relies on an estimated €12.75 billion from this tax in the coming year.

If the surcharge is deemed unconstitutional, the government may face a substantial budget shortfall and potentially need to refund up to €65 billion collected since 2020. This ruling could also relieve businesses, potentially saving them €65 billion, providing much-needed financial flexibility for investments.

The case, brought by FDP politicians, argues that the surcharge is unconstitutional following the end of the Solidarity Pact II in 2019.