Marcel Zech, a 27-year-old council member of the National Democratic Party of Germany (NPD) in a town just north of Berlin, faces up to five years jail for inciting racial hatred, prosecutors told AFP.
Zech's tattoo was photographed in November when he took his shirt off at a public swimming pool in Oranienburg, in the eastern state of Brandenburg which surrounds the capital.
It features the German words "Jedem das Seine" (To Each His Own) – the message at the front gate of the Buchenwald concentration camp - and a picture of the former Auschwitz death camp in occupied Poland with barbed wire fences.
Oranienburg is the site of Sachsenhausen, a Nazi concentration camp, where tens of thousands of inmates died.
Zech faces court next Tuesday, said the local newspaper Potsdamer Neueste Nachrichten.
Chancellor Angela Merkel's government has labelled his fringe party the NPD, which is most popular in the formerly communist East Germany, "an anti-democratic, xenophobic, anti-Semitic, anti-constitutional party".
The upper house of parliament in 2013 launched a push before the Constitutional Court to ban the NPD.
A similar attempt a decade earlier failed, mainly because the presence of undercover state informants within party ranks was deemed to have sullied the evidence.
The country's highest court is set to hear the relaunched case against the NPD from March 1-3.
The NPD scored just 1.3 percent in 2013 national elections and has never entered the national parliament but is represented in two eastern states' legislatures and some city councils.