Germany’s top court on Tuesday stripped a neo-Nazi party of the right to public financing and the tax advantages normally extended to political organizations, a decision that could provide a blueprint for government efforts to head off a resurgence of the far right.

Although the party, Die Heimat, which means the Homeland, was already too small to receive public funding, the case was closely watched because it could have implications for countering the Alternative for Germany, or AfD, a far more popular far-right party.

“Today’s decision by the Federal Constitutional Court sends out a clear signal: Our democratic state does not fund enemies of the Constitution,” Nancy Faeser, Germany’s interior minister, said in a statement.

The government had tried to ban Die Heimat, which was formerly known as the National Democratic Party, or N.P.D., but failed because the court found that the party did not have enough support to hold any meaningful influence, prompting the government to begin in 2019 the procedure that culminated in the funding ban on Tuesday.

In recent months, scholars and politicians have argued that the AfD should be banned on the basis that the party represents a threat to democracy. Others, however, have warned that approach, which would take years to clear all of the political and legal hurdles, could backfire by making the party even more popular.

Some experts have said that a ban on its public financing, as the court did with Die Heimat, could be an effective middle ground: It would hinder the AfD, without banning it outright.

The N.P.D. was a notorious extreme-right party with established links to the neo-Nazi scene. In the 1960s and 1970s, when the original Nazi generation was still alive and voting, it managed to send delegates to seven different statehouses.

The party narrowly missed sending representatives to the federal Parliament in 1969, when the party received 4.3 percent of the vote.

In recent decades, the party’s popularity and significance have waned, and it rebranded itself last year. The government estimates that it had only 3,000 members in 2022. In the last national election in 2021, fewer than 65,000 people voted for it.

That figure represents far less than 0.5 percent of all votes cast, which is the threshold to receive state funding. But the successful effort to deny it state funds nonetheless sends a message, and the ruling, which is valid for six years, also means that prospective donors can no longer give money to the party tax-free.

The Office for the Protection of the Constitution, which can use intelligence tools to monitor extremism, had previously found that the N.P.D. was right-wing extremist at its core, prompting the German government to try twice in recent decades to ban it.

Before a party can be outlawed, the government has to prove that the organization is active and aggressively working against the Constitution.

In Germany, the Federal Constitutional Court has the final say on whether to ban parties and such an action is very rare. In the history of modern Germany, it has only happened twice: to the Socialist Party of the Reich (a rebranded Nazi Party) in 1952 and to the Moscow-funded Communist Party in 1956.

In two rulings concerning the N.P.D. — one in 2003 and another in 2017 — the court declined to ban the party. In the 2017 ruling, the court found that, while the party was extremist, it was not popular enough to pose any real danger to German democracy.

Germany uses public financing of parties to diminish the power of private donations. Parties receive funding from the state based on their performance in the most recent election. For big parties, that means millions of euros in campaign funds provided by the government.

“The forces that want to corrode and destroy our democracy must not receive a single cent of state funding for this — neither directly nor indirectly through tax breaks,” Ms. Faeser said in her statement.

The AfD is poised to make big gains this year when three eastern states go to the polls and that led to nearly a million people taking to the streets in towns and cities across Germany this weekend to show their opposition.

The prompt for the wave of protests was news of a secret meeting involving representatives of the AfD, members of the right wing of the main conservative party, the Christian Democratic Union; known neo-Nazis; and businesspeople. The meeting was revealed by Correctiv, a small, crowd-funded investigative news site.

During the meeting, which took place in a small hotel not far from where the Nazis planned the final phase of the Holocaust in 1942, participants discussed the mass deportation of foreigners and even of some German citizens with foreign backgrounds.

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