Germany's domestic intelligence agency on Friday classified the far-right Alternative for Germany as an extremist entity that threatens democracy, a move enabling it to better monitor the party that came second in February's federal election.
The status should make it easier for authorities to use secret methods to monitor the party, for example, by recruiting confidential informants and intercepting communications.
The stigma as well as restrictions on civil service employment could also hamper the party's ability to attract members.
The co-leaders of the Alternative for Germany (AfD) on Friday said they would take legal action against the domestic intelligence agency's classification of the party as extremist, describing the decision as a "severe blow to German democracy".
"The AfD is being publicly discredited and criminalised shortly before change of government," Alice Weidel and Tino Chrupalla said in a statement.
The party "will continue to defend itself legally against these defamatory statements that endanger democracy," the statement added.
A regional lawmaker from the Alternative for Germany referred to the party's classification by the domestic intelligence agency as extremist as "politically questionable."
"It is sad to see the state of democracy in our country when the old parties are now even using the most politically questionable means against the strongest opposition party," said Anton Baron, a lawmaker in the state of Baden-Wuerttemberg.
The domestic intelligence agency said in a statement that "The ethnicity- and ancestry-based conception of the people that predominates within the party is not compatible with the free democratic order."
"It aims to exclude certain population groups from equal participation in society, to subject them to treatment that violates the constitution, and thereby assign them a legally subordinate status."
The AfD does not consider German citizens of immigrant background from predominantly Muslim countries as equal members of the German people, it added.
This approach led to individuals and groups being "defamed and vilified", stirring up "irrational fears and hostility toward them," it added.
Future of AfD in the new parliament
The decision comes days before conservative leader Friedrich Merz is due to be sworn in as Germany's new chancellor and amid a heated debate over how to deal with the AfD in the new parliament.
The party won a record number of seats which theoretically entitles it to chair several key parliamentary committees although it would still need the backing of other parties.
Analysts said the decision risks further fueling support for the AfD and its narrative that it is being sidelined by a "cartel" of established parties. The party has topped several polls in recent weeks.
Certain factions of the AfD such as its youth wing had already been classified extremist, while the party at large was classified a suspected extremist case in 2021.
US Secretary of State Marco Rubio said on Friday that Germany should reverse its course.
"Germany should reverse course" Rubio said on X, calling the move "tyranny in disguise."