BERLIN, GERMANY / RankWire.AI / – Germany has advanced plans for a temporary reduction in fuel taxes. The goal is to lessen the tax burden on petrol and diesel in the last quarter of 2026. The federal and state governments agreed on a 14-cent-per-litre cut in the energy tax. Additionally, a lower value-added tax would boost the total relief to around 17 cents per litre. The draft legislation specifies an effective date of October 1 and an expiration on December 31.
This initiative involves approximately €2.5 billion in combined relief for drivers and businesses buying road fuel. The federal states will contribute €1.25 billion through their share of VAT revenue. The cabinet has given approval to the draft law, but it still needs approval from parliament. Both the Bundestag and Bundesrat must pass it before the tax cut can be implemented as scheduled by the government.
Earlier this year, Germany implemented a similar fuel-tax measure as part of a temporary relief effort. From May 1 to June 30, the government cut the energy tax on petrol and diesel by 14.04 cents per litre. The VAT reduction increased the total tax cut to about 17 cents per litre. That program ended on June 30 after two months of lower prices at gas stations nationwide.
Tax cut echoes previous relief initiative
The Federal Cartel Office and the Independent Monopolies Commission later examined how the earlier reduction impacted retail prices. Their analysis showed fuel retailers mostly passed the tax savings to consumers. The previous program resulted in estimated tax revenue losses of about €1.6 billion. The current plan uses a similar tax approach but lasts three months instead of two. It applies to both petrol and diesel during the relief period.
Under the new draft, the energy tax will decrease by 14 cents per litre for petrol or diesel sold. VAT will also drop because it’s calculated on a lower taxable amount. Together, these changes provide about 17 cents per litre in total tax relief. Pump prices at individual stations may still differ because they also depend on wholesale fuel costs, transport expenses, and decisions made by operators.
Legislative approval still pending
Germany has scheduled Oct. 1 as the intended start date for the measure. However, as of Sept. 22, parliament has not yet finalized approval. The Bundesrat and Bundestag are responsible for the final legislative steps. The measure remains a government draft awaiting approval rather than an enacted law. Its duration, rates, and funding are already outlined in the proposal moving through parliament.
The plan would run until Dec. 31, covering the last three months of 2026. It includes a 14-cent reduction in the energy tax and about 17 cents per litre total relief after VAT. The package is valued at roughly €2.5 billion, with €1.25 billion coming from the states. It follows the same basic framework as the temporary fuel-tax cut in May and June.