According to staff, the nursery has failed to celebrate the Christian holiday for several years as its pupils mostly follow Islam.
But Turkish parents whose children attend the nursery say they have no problem with celebrating Christmas – as long as Muslim festivals are also celebrated.
Ingo Happel-Emrich, spokesman of the City of Kassel, said there were “some dissatisfied parents who want more religiosity”.
He said: “For the urban children’s day-care centres we are guided by the Hessian educational plan.
“It said that we should not engage in religious guidance, but should very much teach our values, such as solidarity, charity, sharing and justice.”
Even Christmas carols have been banned at the day care centre, local media reported, because most of the children attending the facility were not of the same faith.
Dr Ali Sak, who leads the group, said he was not aware of any resentment or complaints from Muslim parents who did not wish to expose their children to foreign religious influences.
He said: “The ‘suspending’ of celebrations due to alleged respect for other religions leads precisely to the contrary of what is intended.
“For the Föted, the celebration of festivals, especially of religious festivals, is a positive sign of living together.”
However, the local council has claimed reports the centre has banned Christmas are false, and all nurseries are free to celebrate any religious festivals they so choose.
Anne Janz, councillor for youth, school, women and health in Kassel, said: “This is also true for the children’s day care centre Sara-Nussbaum-Haus.
“The assertion that the Christmas festival is regularly cancelled is simply wrong. ”
Outspoken leader of the far-right Party for Freedom in the Netherlands, Geert Wilders blasted the chain saying they had “completely lost their mind”.
The latest controversial move comes after the supermarket banned Father Christmas’ helper Black Pete from packaging after complaints of negative stereotyping and racism.