New draft bill to amend the Energy and Electricity Tax Act in Germany
1. Background
After the failed draft bill on modernisation and bureaucracy reduction in electricity and energy tax law in 2024 in Germany, the current federal German government is now making a new attempt. The draft bill for a third law amending the Energy and Electricity Tax Act, presented by the German Federal Ministry of Finance on 5 August 2025, essentially incorporates the changes proposed by the former government. The law is intended to adapt electricity and energy tax law to current developments, consider the amended provisions in EU state aid law and promote the reduction of bureaucracy. Electricity and energy tax law will also be streamlined in the area of regulations relating to electricity generation and adapted to EU legal requirements. The new law is scheduled to take effect on 1 January 2026.
2. Relevant changes to energy tax law
In the area of energy taxation, the principle of tax exemption for all energy products used for electricity generation, as stipulated by EU law, will be consistently harmonised. As an example, sec. 53 of the draft bill uniformly regulates the tax relief for energy products used to generate electricity. If the electricity generated is subject to preferential electricity tax treatment due to EU state aid rules, this does not result in the exclusion of this tax relief. Furthermore, the tax relief in sec. 47 para. 1 No. 4 of the draft bill is extended to include verifiably taxed, self-produced energy products when used for the purposes of own consumption as specified in the law. The possibility of tax relief restores the mandatory tax exemption provided for under EU law.
The tax exemption rules, i.e. for gaseous energy products, will be also adjusted to the EU requirements amended in 2023. Furthermore, only gases that are directly used or directly supplied and not fed into the natural gas grid are covered by the tax exemption. The tax-exempt use of energy products in watercraft will be extended to include, among other things, hydrogen, anhydrous ammonia, methyl alcohol, FAMAE and biodiesel. As a result, these marine fuels can be used in commercial shipping with immediate tax exemption.
Energy products in a tax warehouse are not considered removed or withdrawn, if the withdrawal is only temporary for the purpose of maintenance, repair or cleaning of pipelines and storage facilities. In this case, no energy tax is levied.
Designer fuels that consist predominantly of gas oil are newly defined in the draft bill. The supply of designer fuels in the tax territory is considered a supply of fuel and results in tax liability. This should put an end to the abusive trade in such products.
3. Relevant changes to electricity tax law
The current electricity tax law only partially reflects current developments, particularly in the field of electromobility. Developments in the field of electricity storage and decentralised electricity generation using renewable energies also necessitate adjustments and simplifications to the electricity tax law. The draft bill represents a necessary and important step towards definitional clarity, legal certainty and the need for new regulations.
A key point in the draft bill is the regulation of the tax treatment of charging points for electric vehicles. Clear guidelines are being created for bidirectional charging to prevent electric vehicle users from becoming suppliers and tax debtors. This simplifies business models, reduces transaction costs and can thus lead to a greater variety of related offers on the market.
The inclusion of other forms of energy storage in the law also represents an innovative approach. Double taxation will be comprehensively avoided in future. Electricity storage systems, regardless of their technology, belong to the public supply network if they are recorded in the so-called Market Master Data Register.
The relief rate for taxable persons in the manufacturing sector and in agriculture and forestry is set at EUR 20/MWh for an indefinite period. As a result, this will lead to a tax burden of EUR 0.50/MWh for energy-intensive taxable persons, which corresponds to the minimum tax rate under EU law.
Landfill gas, sewage gas, and biomass are no longer considered renewable energy sources according to the draft Electricity Tax Act. Electricity generated from these sources no longer benefits from the current tax exemption. However, if used in highly efficient CHP systems, with a rated electrical output of up to 2 MW, the tax exemption remains in place.
Electricity used to generate electricity is in general exempt from electricity tax. The tax exemption will be extended to electricity that is withdrawn for the purpose of maintaining the ability to generate electricity.
