The anti-austerity maverick will head the list of Demokratie In Europa, a German political party that is part of the pan-European, cross-border movement DiEM25 set up by Varoufakis in 2016. It will seek to gain seats for the first time in the European Parliament.
Although he is not a German citizen, Varoufakis and his movement said he meets the conditions to stand as a candidate in Germany as he is an EU citizen who has a residential address in the country.
The 57-year-old economics professor said in a statement on Sunday that his party will offer a “Green New Deal for Europe: a realistic, credible, rational and immediately implementable policy agenda for the whole of Europe”.
According to the party's campaign programme, it will push to “ban tax havens within the EU” and put those outside the bloc on a black list.
It will also seek a “new EU budget” to fund projects like building up green infrastructure, fighting poverty and integrating immigrants.
The budget would be partly financed by taxes on carbon and financial transactions, said the programme.
Varoufakis bitterly opposed Chancellor Angela Merkel's austerity-for-aid insistence in the Greek debt crisis, but has praised her for keeping Germany's doors open to asylum seekers.
In 2016, the former minister launched DiEM25, a transnational anti-establishment movement urging a “new deal” for a continent hit by the fallout of the 2008 economic crisis.
The name is an acronym for Movement for Democracy in Europe by 2025.
Prominent backers of the movement include Canadian journalist Naomi Klein, US intellectual Noam Chomsky and British musician Brian Eno.