In a precedent-setting decision, the German Federal Tax
Court in Cologne has ruled that two Church of Scientology corporations
headquartered in Los Angeles are exempt from tax in Germany. Ruling that these
organizations qualify under the 1989 income tax treaty between United States
and Germany, the court overturned the German federal tax office's May 1996
denial of their exemption applications.
The Court found in favor of Scientology Missions International (SMI) and the
International Hubbard Ecclesiastical League of Pastors (IHELP), both of which
had filed a 1996 lawsuit against the Bundesamt Fuer Finanzen (Federal Finance
Office) in Cologne.
The Court held that SMI and IHELP are eligible for relief under the Treaty
because in 1993 the U.S. Internal Revenue Service had recognized them as
tax-exempt, religious and charitable organizations. The Court specifically
ruled that, under the Treaty, it was inappropriate for the Federal Finance
Office to ignore or seek to contradict the IRS exemption rulings.
In its adverse administrative ruling, the Federal Finance Office refused even
to consider, much less give any weight to, the fact that SMI and IHELP are tax
exempt in the United States. They also refused to attach any importance to the
extensive and exhaustive administrative proceedings they and other Church
organizations went through to secure Internal Revenue Service (IRS) recognition
as tax exempt.
Instead, the Finance Office relied exclusively on a negative March 1995
conclusion about Scientology by the Federal Labor Court in Germany. Just last
week, however, the Federal Labor Court essentially nullified its 1995 decision
when it ruled in a similar case that staff in churches of Scientology in
Germany "seek idealistic purposes and spiritual perfection through the
teachings of Scientology" and are not therefore in an employee-employer
relationship with the Church.
Rev. Heber Jentzsch, President of the Church of Scientology International, says
the ruling has major significance:
"For the first time, the German government has been compelled to consider
and follow how other governments regard Scientology. This decision is an
important step in the Church's ongoing effort to be treated the same as other
religions in Germany, as Germany's own constitution and international treaties
require. The impact of this decision from a senior German tax court will have
profound impact throughout Europe."
SMI is the mother church for all Scientology missions, which are generally
smaller and minister fewer services and courses than larger churches of
Scientology. IHELP was created to provide Scientology ministers who minister
outside organized churches with the ecclesiastical guidance they need. SMI and
IHELP support their religious programs through tithes or license fees they
receive from missions and Scientology ministers, respectively. SMI's case
concerns Scientology missions in Bremen, Nuremburg and Goeppingen, which until
today's ruling have been required to pay 30% of the license fees to the German
Tax Office.
Church of Scientology International, as the mother church of the Scientology
religion, requests that SMI oversees Scientology missions worldwide to ensure
that they adhere to all ecclesiastical policies.
Scientology has been officially recognized as a religion in many countries
including the United States, Sweden, Portugal, South Africa and Australia.
Hundreds of administrative and judicial decisions worldwide, including many in
Germany, have found Scientology to be a religious community.