The basic tax allowance determines the income threshold below which no income tax is payable. For the year 2023, it stood at 10,908 euros. A married couple from the jurisdiction of the Münster Finance Court considered this amount to be too low and took the matter to court to force an increase. However, the court dismissed the claim.
What the couple had complained about
The claimants argued that the basic allowance of 10,908 euros no longer fully covered the tax-law subsistence minimum. In support of their case, they referred to the ‘Bürgergeld’ (citizen’s income): the allowance must be at least as high as the ‘Bürgergeld’ payments plus the housing costs recognised under that scheme. Specifically, they requested an increase of 500 euros per person. They also demanded that the annual broadcasting licence fee of 220 euros be recognised as part of the subsistence minimum and be exempt from tax.
The relevant tax office had initially dismissed the appeal as inadmissible because the tax assessment notice on this matter was in any case already subject to a reservation pending a final constitutional ruling. The Tax Court nevertheless allowed the claim, as constitutional matters are ultimately decided only by the Federal Constitutional Court and the claimants have a legitimate interest in judicial protection.
As ruled by the Münster Finance Court
The Münster Finance Court found no sufficient grounds to suggest that the basic allowance was unconstitutional. The allowance of 10,908 euros for 2023 is based on the Federal Government’s 14th Report on the Minimum Cost of Living. This report comprises three components:
- Standard allowance: 6,024 euros
- Accommodation costs: 3,828 euros
- Heating costs: 1,056 euros
According to the court, the methodology used to determine these amounts is transparent and beyond reproach. Nor does the discount rate applied give rise to any unconstitutional discrimination.
Regarding the argument concerning the broadcasting licence fee, the court clarified that social law and tax law serve different purposes. Social law is based on an individual’s needs, whereas tax law is guided by the principle of the ability to pay of all taxpayers. It is therefore not necessary for the two systems to be precisely aligned under tax law. Certain generalisations – that is, blanket assumptions made without a detailed examination of individual cases – are permissible under constitutional law.
What happens next
The Finance Court has granted leave to appeal to the Federal Finance Court (BFH). Several cases on the same issue are already pending there, under the case numbers III R 26/24, III R 41/25 and III R 42/25. Ultimately, only the Federal Constitutional Court can provide a definitive answer to the question of whether the basic allowance for 2023 was in accordance with the Constitution.
Anyone wishing to raise a similar objection to their own tax assessment for 2023 should bear in mind that many assessments on this matter have already been issued on a provisional basis. This means that the tax office has expressly left the matter open and is awaiting clarification from the highest court. If in doubt, it is advisable to seek advice from a tax adviser or solicitor to assess your own situation.
Münster Regional Court, judgement of 16 June 2026, case number 2 K 2077/25 E
Source: Haufe: Tax
This post and the accompanying image were created with the help of AI and have been editorially reviewed.
