Protestants have taken a less stern position, saying non-taxpayers are still welcome to attend services and take communion. But becoming a godparent, getting married in a church or taking a job in church-affiliated institutions such as hospitals or kindergartens are off-limits to those who stop paying their taxes.
Switzerland and Austria also tax Catholic and Protestant church members. In Denmark, the State Lutheran church collects a tax from its members. Members of Sweden's Lutheran Church pay around 1 percent of their income, collected by the national tax authorities, just as in Finland.
In Italy, tax-payers have the choice of diverting a small part of their income taxes to religious institutions, including the Catholic Church and the country's Jewish community, but the contribution is voluntary.
In none of those countries have been the churches take such a firm stand against dropouts.
So far German courts have stood by the bishops' decision. This week the country's top administrative court threw out a lawsuit against the archdiocese of Freiburg by retired theologian Hartmut Zapp, who has spent years fighting the Catholic church over the tax.
Zapp argued that a Catholic should be free to stop paying but remain a member of the spiritual community and that his religious beliefs could not possibly be tied to a tax payment.
The archdiocese responded in a statement that "those who lack solidarity bid farewell to the community of believers."
The tax issue presents moral and ethical dilemmas to millions of German believers, even dividing couples.
Sonja Trott, a 34-year-old teacher from Munich, said she quit the Catholic Church 15 years ago because she no longer believed in its teachings.
"Now I'd like to convince my husband that he also should quit, that would save us a lot of money," she said.
But her husband Christoph, a sales executive, says he cannot imagine refusing to pay on moral grounds because it would seem like a betrayal of his faith. "I don't like paying it, but I do because I fear the step of quitting the church."
He would prefer to donate part of the money to charities "but well, in Germany the payment determines whether I'm allowed to consider myself a Catholic or not."
For other Germans, it's unethical to stop paying the tax but continue to use the church when it suits them.
Christine Solf, a Munich-based consultant, says she doesn't attend services regularly but appreciates the church's charitable work. For her, church membership is also a family tradition.
"I know people who quit for financial reasons but then still want their children to be baptized. That's not OK in my opinion," she said.
Juergen Baetz can be reached on Twitter at www.twitter.com/jbaetz
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