A regional parliamentary committee on Thursday recommended lifting the immunity of Alternative for Germany (AfD) co-chairman Frauke Petry, raising the possibility that prosecutors will charge her with perjury.
The decision is the latest blow to the right-wing party, whose popularity has slumped in the last year, and comes five weeks before a federal election.
Petry's Alternative for Germany party has campaigned heavily against immigration and is expected to enter the federal parliament for the first time in next month's German elections.
Unless further objections are raised by Saxony's state parliament, Petry's immunity will be lifted next week. The 42-year-old has herself requested the move, saying she wants to clear her name.
"The immunity committee agreed unanimously to recommend the lifting of immunity," the Saxony assembly's committee said in a statement. Petry has immunity as a member of the assembly.
If there are no written objections from members of the assembly within a week, the committee's recommendation will stand. Otherwise a vote in the assembly will take place.
The AfD, polling at around 8 percent compared to about 14 a year ago, is likely to enter the federal parliament on Sept. 24. Chancellor Angela Merkel's conservatives look set to win the most seats but they will probably need a coalition partner.
Prosecutors have been pursuing the case against Petry, an increasingly isolated figure in the AfD, for more than a year. She suffered a defeat in April when delegates refused to discuss her plan to shift the party towards the mainstream.
The AfD was originally set up as an anti-euro party in 2013 but is now more focused on immigration and has made big gains in state elections.