By Court order of decision of 15 December 2015 (2BvL 1/12), published only recently, the German Constitutional Court (second Senate) has confirmed the practice of treaty override in tax law. The euphemism “treaty override” means that the German legislator adopts a law which violates a prior international treaty (often a treaty on double taxation). The Federal Tribunal on Finances (Bundesfinanzhof) had doubts about the constitutionality of this practice. It was convinced that a recent amendment of the Income Tax Act which is incompatible with a German-Turkish dual taxation treaty of 1985 is unconstitutional, exactly because it violates the treaty.
If in a pending judicial proceeding, a German court is convinced that a legal provision, which it needs to apply to resolve the case under scrutiny, is unconstitutional, that court must stay the proceeding and pose a reference question on the law’s constitutionality to the German Constitutional Court (Art. 100(1) German Basic Law). Such a reference procedure guarantees that the Constitutional Court retains the monopoly for declaring a law unconstitutional, and is thus a hallmark of the concentrated system of constitutional control in Germany.
Translation into constitutional questions
The judicial proceeding under Art. 100(1) Basic Law is available only for questions of constitutionality, not for questions of compatibility with international law. This worked, because the courts involved in fact “translated” the question of the relationship between international law and domestic law into a constitutional law question of the separation of powers and of constitutional principles: rule of law versus democracy.
The Federal Tribunal on Finances deemed the treaty override unconstitutional for violation of the rule of law and of the German constitutional principle of “friendliness towards international law” (“Völkerrechtsfreundlichkeit”).
The Constitutional Court did not follow this view. It opined that the constitutional principle of democracy (which includes the principle of discontinuity of parliament following elections) demands that the German Parliament is free to change its mind and to make or amend a law even if this violates an international treaty which had been ratified by a previous Parliament (Order of 15 Dec. 2015, paras 53-54). Read the rest of this entry…