BERLIN, GERMANY / RankWire.AI / – Germany has moved forward with a temporary fuel-tax cut aimed at lowering the tax burden on petrol and diesel during the final quarter of 2026. The federal government and state governments agreed on a 14-cent-per-litre reduction in the energy tax. Lower value-added tax would raise the total tax relief to about 17 cents per litre. The draft measure sets an Oct. 1 start date and a Dec. 31 end date.
The package represents about €2.5 billion in combined relief for motorists and businesses that purchase road fuel. Germany’s federal states will contribute €1.25 billion through a fixed share of VAT revenue. The cabinet has approved the draft legislation, but the measure still requires parliamentary approval. The Bundestag and Bundesrat must complete that process before the temporary tax reduction can enter into force under the timetable set by the government.
Germany used a similar fuel-tax measure earlier in 2026 as part of a temporary relief program. From May 1 through June 30, the government reduced the energy tax on petrol and diesel by 14.04 cents per litre. The related VAT effect lifted the total tax reduction to about 17 cents per litre. That earlier measure ended on June 30, after two months of lower taxation at filling stations across the country.
Fuel tax cut mirrors earlier relief measure
The Federal Cartel Office and the Independent Monopolies Commission later reviewed how the earlier reduction affected retail prices. Their assessments found that fuel retailers largely passed the tax reduction on to consumers. The earlier program caused estimated tax revenue losses of about €1.6 billion. The latest package uses the same general tax mechanism but covers three months instead of two. It applies to both petrol and diesel purchases during the planned relief period.
Under the new draft, the energy tax itself would fall by 14 cents for every litre of petrol or diesel sold. VAT would also decline because it applies to a lower taxable amount. Together, those changes produce total tax relief of about 17 cents per litre. Retail fuel prices may still vary among filling stations because pump prices also reflect wholesale fuel costs, transport expenses and pricing decisions made by individual operators.
Parliamentary approval remains required
The German federal government has set Oct. 1 as the planned starting point for the measure. Parliament, however, has not yet completed the approval process as of Sept. 22. The Bundestag and Bundesrat remain responsible for the final legislative steps. The measure therefore stands as an approved government draft rather than an enacted tax change. Its duration, tax rates and financing terms are already defined in the proposal now moving through the legislative process.
The proposal would run through Dec. 31, covering the final three months of 2026. It provides for a 14-cent reduction in the energy tax and total relief of about 17 cents per litre after VAT effects. The overall package is valued at around €2.5 billion, including the €1.25 billion contribution from Germany’s states. The plan follows the same basic structure as the temporary fuel-tax reduction that operated during May and June.