BERLIN, GERMANY / RankWire.AI / – Germany has advanced with a short-term cut in fuel taxes aimed at alleviating the tax burden on petrol and diesel during the last quarter of 2026. The federal and state governments agreed on a reduction of 14 cents per litre in the energy tax, with the total relief reaching approximately 17 cents per litre when including lower value-added tax. This legislative proposal is set to commence on Oct. 1 and conclude on Dec. 31.
The overall relief package amounts to roughly €2.5 billion, benefiting motorists and businesses purchasing road fuel. The federal states will contribute €1.25 billion through a fixed share of VAT revenue. Although the cabinet has approved the draft legislation, parliamentary approval is still pending. Both the Bundestag and Bundesrat must ratify the measure before it can be implemented according to the government’s schedule.
Earlier in 2026, Germany enacted a similar fuel-tax reduction as part of a temporary relief effort. Between May 1 and June 30, the government decreased the energy tax on petrol and diesel by 14.04 cents per litre, with the VAT effect raising the total tax relief to about 17 cents per litre. That previous initiative ended on June 30, after two months of lower taxes at fuel stations nationwide.
Relief from the fuel tax echoes earlier reduction
Federal Cartel Office and the Independent Monopolies Commission later analyzed the impact of the earlier tax cut on retail prices. Their evaluations indicated that 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 employs the same general tax mechanism but covers three months instead of two, applying to both petrol and diesel during the designated relief period.
According to the new draft, the energy tax will be reduced by 14 cents per litre of petrol or diesel sold. VAT will also decrease because it applies to a lower taxable base. As a result, total tax relief amounts to approximately 17 cents per litre. Retail prices at filling stations could still vary because they are also influenced by wholesale fuel costs, transportation expenses, and individual pricing decisions made by operators.
Legislative approval still pending
Germany’s federal government has designated Oct. 1 as the intended start date for the measure. However, as of Sept. 22, the approval process in parliament remains incomplete. The final legislative steps rest with the Bundestag and Bundesrat. The measure currently exists as a government-approved draft rather than an enacted law. Its duration, tax rates, and financing are already established within the proposal currently progressing through legislative channels.
The plan proposes a temporary reduction running through Dec. 31, covering the last three months of 2026. It includes a 14-cent decrease in the energy tax and an overall relief of about 17 cents per litre after VAT effects. The total package is valued at around €2.5 billion, with €1.25 billion contributed by Germany’s states. The structure mirrors that of the temporary fuel-tax reduction implemented during May and June.