The German Federal Ministry of Finance plans to retroactively correct an error in the recently amended tobacco tax law. This is based on a formulation assistance guide provided to the parliamentary factions of the CDU/CSU and SPD, according to reports in the newspaper “Die Welt”.
The issue stems from a flawed implementation regulation. Originally, certain changes to tobacco tax rates were scheduled to take effect in 2027, but due to the error, they were partially applied beginning October 21, 2026.
The law was passed by the Bundestag on October 15, subsequently passed the Bundesrat the next day, and was officially published in the Federal Law Gazette on October 20. The Ministry stated that during the preparation of the implementation regulation, a segment of the law was inadvertently excluded. Consequently, for the period between October 21 and December 31, 2026, the legal situation became ambiguous. According to the Ministry, tobacco products such as cigarettes, cigars, cigarillos, fine tobacco, pipe tobacco, and heated and waterpipe tobacco were subject to higher tax rates during this period than originally intended by the law. Conversely, the law did not set a tax rate for substitutes for tobacco products during this time.
To rectify this error, the Ministry intends to use the already pending law amending the 2026 financial equalization procedure. The CDU/CSU and SPD are expected to introduce the prepared amendment as a motion. For the period from October 21 to the end of the year, the taxes applicable up to October 20 will be officially applied retroactively.
The Ministry argues that this retroactive ruling represents a benefit for taxpayers regarding most affected tobacco products, as it would apply lower rates than stipulated by the current wording of the law. Furthermore, the Customs Administration has continued to accept tax declarations based on the previous, lower rates since October 21.
The situation concerning tobacco substitutes is different. Because the current legislation lacks a specific rate for this period, the government plans to retroactively establish a tax of 0.32 euros per milliliter. The Ministry asserts that those affected could not reasonably rely on the temporary exemption of this tax, noting that relevant associations, the General Customs Directorate, and the Tax Stamp Authority were informed and an error correction was announced once the mistake was discovered.
However, Wolfgang Kubicki, the FDP Federal Chairman, has raised constitutional concerns regarding the planned retroactive application. Kubicki told “Die Welt” that imposing taxes retroactively constitutes a fundamental breach of the rule of law and is only permissible in strictly limited extraordinary circumstances.
Kubicki criticized the rationale provided by the Finance Ministry as “extremely thin” and insufficient. He argued that this action would not bring legal certainty but would instead create further chaos and instability. He urged the Bundestag to review the constitutional implications of the planned regulation. Any retroactive interference with existing legal positions requires a robust constitutional justification, something the Ministry has yet to provide. Kubicki emphatically stated that the rule of law is not a mere formality that can be bypassed with a weak ministerial justification, concluding, “The axe simply cannot be swung.”
