BERLIN, GERMANY / RankWire.AI / – Germany has advanced with a provisional reduction in fuel taxes, targeting a decrease in the levies on petrol and diesel during the last quarter of 2026. An agreement between the federal government and state authorities has finalized a 14-cent-per-litre cut in the energy tax. Additional savings from lowered value-added tax will bring the overall tax relief to approximately 17 cents per litre. The proposed measure is scheduled to commence on Oct. 1 and conclude on Dec. 31.
The comprehensive package amounts to roughly €2.5 billion in total relief for both drivers and commercial entities purchasing road fuel. The federal states of Germany will contribute €1.25 billion through a fixed share of VAT revenue. While the cabinet has already given the green light to the draft legislation, it still requires approval from the parliament. The Bundestag and Bundesrat must approve it before the temporary tax reduction can be implemented, following the timetable established by the government.
Earlier this year, Germany employed a similar fuel-tax reduction as part of a temporary relief scheme. From May 1 until June 30, the government cut the energy tax on petrol and diesel by 14.04 cents per litre. The VAT impact increased the total tax relief to about 17 cents per litre. This prior measure ended on June 30, after two months of reduced taxation at fuel stations nationwide.
Fuel tax reduction echoes previous relief efforts
The Federal Cartel Office and the Independent Monopolies Commission later examined the effects of the earlier tax reduction on retail prices. Their evaluations indicated that fuel stations mostly passed the savings on to consumers. The earlier program resulted in estimated tax revenue losses of around €1.6 billion. The current package utilizes the same fundamental tax mechanism but spans three months instead of two. It applies to both petrol and diesel during the designated relief period.
According to the new draft, the energy tax would decrease by 14 cents per litre of petrol or diesel sold. Additionally, VAT would decline because it is calculated on a lower taxable amount. These combined adjustments lead to an overall tax relief of approximately 17 cents per litre. Despite these reductions, retail fuel prices might still differ across stations due to wholesale fuel costs, transportation expenses, and individual pricing decisions by operators.
Legislative approval is still pending
Germany’s federal government has set Oct. 1 as the targeted start date for the measure. However, as of Sept. 22, the approval process in parliament has not yet been completed. The final legislative steps rest with the Bundestag and Bundesrat. Consequently, this measure remains an approved government draft rather than an enacted law. Its duration, tax rates, and funding arrangements are already outlined in the proposal currently progressing through legislative procedures.
The proposal envisions a period lasting until Dec. 31, covering the last three months of 2026. It entails a 14-cent reduction in the energy tax and a total relief of roughly 17 cents per litre after VAT adjustments. Valued at about €2.5 billion, the package includes the €1.25 billion contribution from Germany’s states. This approach mirrors the structure of the earlier temporary fuel-tax reduction that was in place during May and June.