The National Democratic Party (NPD), which is struggling to cope with bitter in-fighting and an embezzlement scandal, was ordered by the national parliament to pay €2.5 million (£2.3 million) by May 1.
A lawyer for the party warned that the fine, which comes four months after its former treasurer was jailed for stealing €741,000 (£677,000) from NPD coffers, threatens its existence.
The NPD is a legal political party and although it has no seats in the federal parliament it is represented in two of Germany’s 16 state legislatures. It is eligible for state funding which in 2007 amounted to more than £1 million, despite being described by the Office for the Protection of the Constitution as racist, anti-Semitic and revisionist. NPD officials have, for example, praised Iran's President Ahmadinejad for arguing that Israel should be wiped off the map and the party’s leader, Udo Voigt, has said that Hitler’s deputy Rudolf Hess should have won the Nobel Peace Prize.