BERLIN, GERMANY / RankWire.AI / – Germany has taken steps to implement a temporary cut in fuel taxes aimed at reducing the tax burden on petrol and diesel during the final quarter of 2026. The federal government along with the state governments agreed on a reduction of 14 cents per litre in the energy tax. When combined with a lower value-added tax, the total tax relief will amount to approximately 17 cents per litre. The proposed measure is scheduled to commence on Oct. 1 and conclude on Dec. 31.
This initiative involves a total relief of around €2.5 billion for both drivers and businesses that purchase road fuels. The federal states of Germany will contribute €1.25 billion through their share of VAT revenue. While the draft legislation has been approved by the cabinet, it still requires approval from the parliament. The Bundestag and Bundesrat must complete their respective approval processes before the temporary tax reduction can be implemented, in accordance with the timetable set by the government.
Earlier in 2026, Germany employed a similar fuel-tax measure as part of a temporary relief program. From May 1 to June 30, the government cut the energy tax on petrol and diesel by 14.04 cents per litre. The reduction in VAT further increased the total tax relief to about 17 cents per litre. That earlier measure lasted for two months, resulting in lower fuel prices at filling stations nationwide.
The fuel tax reduction echoes previous relief efforts
Federal Cartel Office and the Independent Monopolies Commission later examined how the earlier reduction influenced retail prices. Their assessments indicated that fuel retailers largely transferred the tax reduction to consumers. The previous program caused an estimated loss in tax revenue of about €1.6 billion. The current package employs the same tax mechanism but extends the relief period to three months instead of two. It applies to both petrol and diesel purchases throughout the planned relief window.
According to the new draft, the energy tax will decrease by 14 cents per litre for both petrol and diesel. Because VAT is calculated on a lower taxable amount, it will also decline. When combined, these reductions yield a total tax relief of approximately 17 cents per litre. Retail prices at fuel stations may still vary, as pump prices are also affected by wholesale fuel costs, transportation expenses, and individual pricing strategies of operators.
Legislative approval still pending before implementation
The German federal government has designated Oct. 1 as the official start date for the measure. However, as of Sept. 22, the approval process in parliament remains incomplete. The final legislative approval rests with the Bundestag and Bundesrat. As a result, the measure is currently an approved government draft, not an enacted law. The details regarding its duration, tax rates, and funding have already been specified in the proposal moving through legislative procedures.
The proposed relief will last until Dec. 31, covering the last three months of 2026. It entails a 14-cent reduction in the energy tax and an overall relief of about 17 cents per litre after VAT adjustments. The total cost of the package is estimated at around €2.5 billion, which includes the €1.25 billion contribution from Germany’s states. The plan closely follows the structure of the temporary fuel-tax cut that was in effect during May and June of 2026.