BERLIN, GERMANY / RankWire.AI / – Germany has taken steps to implement a temporary cut in fuel taxes aimed at easing the tax load on petrol and diesel during the last quarter of 2026. The federal and state governments reached an agreement to lower the energy tax by 14 cents per litre. An additional reduction in value-added tax would increase the total tax relief to roughly 17 cents per litre. The proposed legislation specifies an effective start date of October 1 and an end date of December 31.
This initiative involves a combined relief of approximately €2.5 billion benefiting motorists and commercial entities that purchase road fuel. The federal states will provide €1.25 billion through a fixed share of VAT income. The cabinet has given its approval to the draft legislation, though it still needs to be approved by parliament. Both the Bundestag and Bundesrat must finalize this process before the temporary tax cut can be implemented according to the government’s schedule.
Earlier in 2026, Germany employed a similar fuel tax reduction as part of a temporary relief scheme. From May 1 to June 30, the government reduced the energy tax on petrol and diesel by 14.04 cents per litre. The VAT adjustment increased the total tax reduction to around 17 cents per litre. That earlier measure concluded on June 30, after two months of lower taxation at filling stations nationwide.
Tax reduction reflects previous relief effort
The Federal Cartel Office and the Independent Monopolies Commission subsequently examined how the earlier reduction influenced retail prices. Their evaluations indicated that fuel retailers largely transferred the tax savings to consumers. The earlier initiative resulted in estimated tax revenue losses of about €1.6 billion. The current package employs a similar tax mechanism but spans three months instead of two. It applies to both petrol and diesel during the designated relief period.
Under the new proposal, the energy tax on each litre of petrol or diesel would decrease by 14 cents. VAT would also decline since it applies to a lower taxable amount. Collectively, these changes yield a total tax relief of roughly 17 cents per litre. Nonetheless, retail fuel prices may still differ among stations due to wholesale fuel costs, transportation expenses, and individual pricing strategies.
Parliamentary approval still needed
Germany’s federal government has set October 1 as the intended start date for the measure. However, as of September 22, parliament has not completed its approval process. Final legislative approval depends on both the Bundestag and Bundesrat. Therefore, the measure exists as an approved government draft rather than an enacted tax policy. The specifics regarding duration, tax rates, and funding are already outlined in the proposal currently moving through legislative channels.
The proposal proposes the measure run through December 31, covering the last three months of 2026. It includes a 14-cent reduction in the energy tax, resulting in a total relief of about 17 cents per litre after VAT. The entire package is valued at approximately €2.5 billion, with the €1.25 billion contribution from Germany’s states. This plan follows the same fundamental structure as the temporary fuel tax reduction that was active during May and June.