The Federal Cabinet has approved drafting guidance for the political factions in the German Bundestag regarding a proposed tax on sugary drinks. If passed by the Bundestag, this levy is scheduled to take effect on July 1, 2027.
The tax is specifically targeting sweetened beverages containing 5 grams or more of sugar per 100 milliliters. The proposed design includes a two-tiered rate structure: liquids containing between five and eight grams of sugar per 100 ml will be taxed at 0.26 euros per liter, while those exceeding eight grams will incur a rate of 0.32 euros per liter.
This sugar drink tax is intended to cover soft drinks (such as cola and orangeade), iced teas, energy drinks, sweetened fruit nectar, and fruit concentrates with added sugar. It also includes sugary syrups and concentrates used in drink preparation, like postmix concentrates or syrups for water bubble dispensers.
However, the regulation explicitly excludes several categories. According to the ministry, alcoholic beverages are exempt because they are already subject to other consumption taxes. Furthermore, the tax will not apply to non-alcoholic alternatives, such as alcohol-free wine (including fruit wine), sparkling wine, beer, liquors, or cocktails made without alcohol. Exemptions also cover milk, oat, and rice drinks and their mixes, as well as pure fruit and vegetable juices and concentrates, and unsweetened shorles. Drinks sweetened with artificial sugar substitutes are also excluded from the tax.
Under the proposed framework, the manufacturers or wholesale businesses will be responsible for the tax liability, following standard consumer tax procedures. The draft includes specific exemptions for smaller, independent producers with an annual output of up to 70,000 liters, as well as a blanket exemption for businesses operating up to 1 million liters. However, this exemption for small producers is contingent upon receiving approval from the European Commission.
Financially, the tax is projected to generate significant revenue for the federal government. The Ministry of Finance estimates that the tax could bring in €690 million in 2027, €925 million in 2028, and between €875 and €890 million between 2028 and 2031. These tax revenues are intended to stabilize contributions to the statutory health insurance system.
