GERMANY: Analysis of the Federal Fiscal Court’s 2019 ATTAC decision

(Translated from German – Rechtssicherheit für politische Willensbildung)

The judgment in the ATTAC case by the [German] Federal Fiscal Court (BFH = Bundes­finanz­hof) affects thousands of foundations (trusts) and associations. This judgment is not very helpful. It does not reflect the social developments of recent decades. In some points, the BFH’s arguments are not convincing. Some questions remained unanswered. The judges missed an opportunity to re-define the concept of political engagement and to correct previous confusing statements by the BFH concerning political purposes. Instead, they turned to the judgments on the law of political parties by the BFH and the Constitutional Court from the 1960s and 1980s.

The judgment in the ATTAC case has two levels. On a meta level, and between the lines, it declares that political intervention is something that does not belong to public-benefit activities, and is only permissible in exceptional cases. Thus the judgment has a depoliticising and restricting effect. The judges presume that political intervention is always associated with a political party. At a concrete level, the public-benefit purpose of (political) education is interpreted in a very restrictive way. This restriction does not apply to all purposes.

Central statements

  • The Federal Fiscal Court confirms that political demands may be developed in the course of pursuing the public-benefit purpose of “popular education”. The court rejects a different opinion, voiced publically by the Federal Ministry of Finance, but not any longer in the appeal proceedings.
  • The Federal Fiscal Court delimits public-benefit civic education narrowly, saying that this purpose does not permit “influencing the decision-making and public opinion towards their own views”. This restriction of the meta-purpose of popular education might also be applied to other purposes that describe activities (meta-purpose) rather than topics (specific purpose), such as the promotion of science and research, or assistance to young people.
  • The Federal Fiscal Court declares that purpose 24, “general promotion of a democratic state”, is not a specific purpose, but just a special form of the (meta-)purpose 7, popular education.
  • The Federal Fiscal Court confirms that political demands may be made to pursue a specific public-benefit purpose, such as environmental protection, equal rights of men and women, or education policy.
  • The Federal Fiscal Court declares that there is a difference between a public-benefit organisation and the network of activists or the people the organisation represents.

Missing statements

The Federal Fiscal Court does not address several legal questions raised in the appeal on points of the law:

  • When is the distance from a political party too small? When are political parties being promoted directly or indirectly?
  • Must the public-benefit purposes from tax model statute be applied literally?
  • Interpretation of the purposes of ATTAC beyond civic education

No pursuit of political demands with meta-purposes

Popular education takes place in a state of intellectual openness. It does not qualify for [tax] incentives if it is committed to shape the political agenda and the public opinion in the direction of [the organisation’s] own views.” (headnote 3)

The public-benefit status is not impaired if [the organisation] suggests solutions for problems of daily politics. … However, it oversteps the area of political education enjoying tax privileges according to Sec. 52, para. 2, item 7 of the Tax Code if these results are to be enforced by influencing the decision-making and the public opinion by means of further measures.” (marginal number 27, referring to education)

The Court follows the argumentation of the Federal Ministry of Finance, distinguishing between specific public-benefit purposes and meta-purposes. The meta-purposes include the “promotion of popular education”. This and other purposes describe an activity, more than a goal or topic. The activity “education” could also serve to pursue a purpose such as environmental protection.

Therefore, the Court states that a public-benefit association under the purpose of civic education can develop demands but it may not advocate the implementation of the demands, unless they are related to civic education. This then makes the purpose a specific purpose.

In public statements concerning the case, the Federal Ministry of Finance had even demanded that public-benefit organisations should not be allowed to develop demands ‒ non-profit civic education work is only to represent the status quo. To propose alternatives is the duty of political parties.  The Federal Fiscal Court goes a step further here but still sets strict limits. Thus, if an association on children’s rights pursues civic education (since the law does not include the purpose “children’s rights”), it may compile and write down demands jointly with children. If the children want to march to the town hall with these demands, the activists of the association must stay in the meeting room. They can only offer an impromptu workshop on the law of demonstrations and training in presenting arguments.

Science and research, assistance to young and old people and the “promotion of the democratic state” ‒ are presumably among those narrowly-defined meta-purposes.

Democracy: Not a specific purpose

Without providing further grounds, the Court claims that the statutory public-benefit purpose “general promotion of the democratic polity within the territorial jurisdiction of this Act” is not a specific purpose. If it were a specific purpose, such as environmental protection, public-benefit organisations could intervene politically with demands concerning democracy. The Court follows the arguments of the Ministry according to which this purpose is only a special form of political education, and simply combines this purpose with the purpose of popular education:

The concept of civic education does not comprise an independent purpose enjoying tax privileges of influencing the formulation of political objectives on the basis of Sec. 52, para. 2, items 7 and 24, of the Tax Code.” (marginal number 28)


It is absurd that the purpose “promotion of democracy” is simply discarded. Tax authorities and courts constantly assume that the legislator incorporated into the law all the purposes that are considered worthy of subsidy. They imply that if a purpose is not in the law, the legislator deliberately chose not to include it.

In the case of “promotion of the democratic state”, the legislator had deliberately chosen to add the purpose into the law on benevolent activity in 1983 already, as the third purpose at that time. That happened in the course of the Flick scandal. At that time, donations to political parties were thoroughly regulated for the first time, and distinguished from donations to public-benefit associations. This purpose was added to the law so that non-governmental organisations could also engage themselves for democracy and intervene politically. Thirty years later, the Federal Fiscal Court ignores this.

Furthermore, the Court does not even bother to give reasons why activities of ATTAC cannot be assigned to a specific purpose, but only states the result briefly:

A continuation of tax-privileged purposes also does not result from a connection with the promotion of the democratic state in Sec. 52, para. 2, item 24 of the Tax Code.” (marginal number 34)

Finally, the promotion of environmental protection according to Sec. 52, para. 2, item 8 of the Tax Code does not apply to measures for the democratic supervision of railway infrastructures either.” (marginal number 34)

On the contrary, it criticises the Hessian Fiscal Court with having “interpreted the concepts ‘popular education’ and ‘democratic state’ too broadly”, and “misjudged the criteria that must be observed with regard to the necessary differentiation from political activities” (marginal number 31).

Political activity for specific purposes: within limits

Since the judgment is concerned above all with the purpose “education” and ignores the allocation of ATTAC activities to other specific purposes, it only touches briefly upon political intervention for specific purposes. Political education work “is to be distinguished from shaping the policy-making and the public opinion in pursuit of the purposes explicitly named in Sec. 52 para. 2 of the Tax Code.” (marginal number 20)

The BFH has continued to adhere to its opinion that the limits of general political activity of a tax-privileged association are still respected if the involvement in political activities falls within the scope of what is needed to promote and achieve the public benefit purposes.” (marginal number 21, reference to the judgment in the BUND case of 2017). However, the BFH gives numerous limitations to this clarification, and does not resolve contradictory concepts from the past. The whole argumentation is presented the wrong way around. The reasons for the judgment begin with:

Someone who pursues political purposes by influencing the political agenda and the shaping of public opinion does not fulfill a public-benefit purpose in the meaning of Sec. 52 of the Tax Code.” (marginal number 16)

Followed by:

According to the BFH’s jurisprudence, the promotion of the general public does not include the pursuit of political ends – taking into account the evaluations resulting from § 52 (2) No. 24 of the Tax Code. … The activity of the association must ‘neither be focused solely nor directly on political activities and the formation of the public agenda’.” (marginal number 18)

While benefiting the general public does include “also critical public awareness and discussion, in order bring to the attention of the public and politicians a concern enjoying tax relief under Sec. 52 para. 2, Tax Code“. But only if in doing so “the direct influencing of the decision-making remains secondary to the promotion of the purpose enjoying tax relief“. “…the politics of the day [should] not be the focus of its activity, but must serve to achieve its goals.”


In other words, public-benefit organisations may only pursue those purposes (including through political actions) that are given in their statutes. If a sports club takes a position against racism, a youth-welfare association on more direct democracy, a development-aid association against unfair taxation models, then they have to be able to justify how and why this relates to the public-benefit purpose.


Political conclusions

It is now up to the Bundestag to clarify the legal situation. The BFH has put the question of further specific purposes before the Parliament. It is the responsibility of the Bundestag to recognise the important role of organisations of civil society for debates in society and also parliamentary decision, and to prevent a de-politicization of public-benefit organisations. The Bundestag must prevent associations from being squeezed into an unregulated area.

Read the full analysis (in German) here.


<Translated from German>
<Translator’s note: The definitions of legal categories such as “charitable”, “philanthropical” and “benevolent” associations differ considerably between jurisdictions. We have translated “gemein­nütziger Verein” by “public-benefit”, but this is only a rough equivalent.>