The initial situation
The introduction of a sugar tax has been discussed in Germany for years. Other countries, such as Great Britain, have gone further and have introduced such a tax on sugar-sweetened drinks. The federal government hesitated for a long time and relied on the principle of voluntary action.
The tax is still politically controversial. Parts of the Union opposed a draft by Finance Minister Lars Klingbeil (SPD), and the Chancellery initially put the brakes on the sugar tax draft. A few days ago, the Union's nine agriculture and consumer protection ministers from the federal states also spoke out against it in a letter to Chancellor Friedrich Merz (CDU). But the SPD also felt betrayed: Anyone who consistently rejected all tax increases had to say how else money would come into the coffers.
A compromise has now been agreed in the cabinet. The Bundestag factions of the Union and SPD should now discuss and implement these in parliament. The new tax is scheduled to start on July 1, 2027 and help stabilize costs in the healthcare system.
Which drinks should the tax apply to?
The new tax will apply to sweetened drinks with a total sugar content of at least five grams per 100 milliliters. According to the Ministry of Finance, these include, for example, lemonades, iced teas, energy drinks and fruit juice drinks with added sugar.
Drinks containing alcohol as well as non-alcoholic beers, wines or cocktails are not affected. Pure fruit and vegetable juices or unsweetened spritzers are not subject to additional tax, nor are drinks with sweeteners, i.e. so-called zero drinks.
There should be exceptions for small and independent manufacturers with an annual production volume of up to 70,000 liters. In addition, an exemption was added for companies with up to one million liters. However, the European Commission still has to approve the state aid.
How much is the tax?
The higher the sugar content, the higher the tax burden should be. Two stages are planned:
In an earlier version, there were three levels: 26 cents from five grams, 32 cents from seven grams and 38 cents from ten grams.
Does this mean that sugary drinks will become correspondingly more expensive?
The draft law states that an immediate impact on prices is to be expected. The design of the sugar drinks tax is designed to ensure that it is passed on to the end customers. With the tax, the price of a liter of Cola, for example, would increase by a total of around 38 cents. The sugar tax would account for 32 cents of this, with around 6 cents in VAT on top.
It would also be conceivable that manufacturers could reduce the sugar content of their drinks in order to reduce the amount of the tax. Then the final price for consumers could rise less.
Why a sugar tax at all?
The sugar tax is intended to generate revenue for the federal budget. According to the current agreement, the federal government assumes that the tax will bring the federal government around 690 million euros in 2027 and then 925 million euros in 2028.
The tax revenue should be used to keep the contributions for statutory health insurance stable. In July, the Bundestag passed the Statutory Health Insurance Contribution Rate Stabilization Act, which provides for the introduction of the sugar drinks tax.
In addition, the tax is intended to give beverage manufacturers an incentive to reduce sugar content and make their products healthier. In the long term, this is intended to reduce the costs in the health system caused by excessive sugar consumption, according to the Federal Ministry of Finance: "The sugar drinks tax also contributes to fairness: those who place greater strain on it through sugar consumption are called upon to finance the system more."
Does a tax really have a positive impact on health?
A study by the Scientific Institute of the Association of Private Health Insurance (WIP) came to the conclusion in January: A tax on sugary drinks could also noticeably reduce consumption in Germany and thus contribute to the long-term prevention of diet-related diseases.
However, there is only limited evidence of direct health effects. These depended heavily on how a possible tax would be designed. In a simulation study, a tax with graduated rates showed the strongest effects on health. Tiered taxes can therefore encourage consumers to switch to alternative drinks with lower sugar content.
Does Germany have a problem with sugar?
The World Health Organization (WHO) recommends consuming less than 50 grams of so-called "free sugar" per day, ideally less than 25 grams. "Free sugar" includes all types of sugar that are added to foods by manufacturers or consumers, as well as sugars naturally occurring in honey, syrups and fruit juices.
