“Sugar levy” – Federal Government plans levy on sugar-sweetened beverages

The debate about a levy on sugar-sweetened beverages is not new, but it has gained considerable momentum in recent weeks. The Federal Government has now decided that it intends to introduce such a levy from 1 January 2028. The first concrete legislative step at federal level has therefore been taken. Manufacturers, importers and distributors of soft drinks therefore have reason to consider the potential forthcoming implications at an early stage.

Decision of the Federal Government and status of the legislative process

At the end of April 2026, as part of the reform of the statutory health insurance system (Gesetzliche Krankenversicherung, “GKV”), the Federal Government decided in principle to introduce a sugar levy on sugar-sweetened beverages from 2028. The decision was taken by the Federal Cabinet as part of a comprehensive financial and health reform.

The sugar levy is intended to generate additional revenue to relieve the burden on the GKV, particularly for preventive measures. A standalone Act setting out the detailed design of the levy has been announced, but no draft bill has yet been published. At present, there is a ministerial draft from the Federal Ministry of Health which merely announces the introduction of the levy. The parliamentary procedure, including introduction in the Bundestag, committee deliberations, resolutions of the Bundestag and Bundesrat, therefore still lies ahead.

Products likely to be affected

On the basis of the current position, a blanket tax on “sugary foods” is not expected. Instead, a targeted charge on certain beverages is likely. It is expected that non-alcoholic soft drinks which are industrially produced and contain added sugar will be subject to the levy if a specified sugar content per 100 ml is exceeded. This is likely to cover lemonades, colas, fizzy drinks, energy drinks and possibly certain iced teas.

Pure fruit juices, despite their high natural sugar content, milk and milk-based mixed drinks, beverages without added sugar or below the relevant threshold, and beverages sweetened exclusively with sweeteners are expected to be exempt. The decisive criteria are likely to be, unlike in excise duty law for example, not the customs tariff number, but rather the list of ingredients, nutrition declaration and the product’s market perception.

Excise duty or special levy?

On the basis of the concept currently expected, this is in all likelihood not a classic excise duty, such as the EU-wide duties on alcohol or tobacco, or the alcopop duty levied only in Germany. Rather, much suggests that the sugar levy will be structured as a so-called special levy with both financing and steering functions, which would distinguish it from a classic tax used for general budgetary financing.

For example, official publications refer to it as a “levy” rather than a “tax”. Unlike taxes, the revenue is also intended to be earmarked for preventive measures within the GKV. The charge is expected to be imposed primarily at manufacturer level, although it may economically be passed on to consumers. The steering objective is to encourage adjustments to beverage recipes in order to reduce sugar content.

Expected collection of the levy

Under the collection system, which has yet to be specified in detail, it is in all likelihood not the end consumer who will be liable for the levy, but the person who first places the beverage on the market commercially in Germany. This may be a domestic manufacturer, a supplier from another EU Member State or an importer from a third country. As far as can be seen, no customs or excise duty collection procedure is planned, meaning no EMCS and no tax warehouses. Instead, a standalone levy regime with regular levy declarations is envisaged.

The amount of the levy is likely to be tiered according to sugar content, with an exempt tier, a lower levy tier and a higher levy tier. The details remain to be seen.

The levy is planned to be introduced on 1 January 2028. The long transitional period is politically intended to allow recipes to be adjusted.

Liability for the levy on beverages from abroad

For imports from third countries and supplies from other EU countries, the levy is likely to be triggered not by crossing the border, but by placing the product on the domestic market. EU suppliers and third-country importers would therefore be treated in the same way as domestic manufacturers. For goods from third countries, the levy would not be assessed under the customs procedure, but subsequently under the special levy regime. Foreign manufacturers without a registered office in Germany are likely to be required to appoint a domestic representative.

Outlook and recommended action

The legislative process remains to be seen. In particular, it will be interesting to see the extent to which the interests of the food and beverage industry are taken into account in the detailed design of the levy obligation. A standalone draft bill is expected in the coming months. Amendments during the parliamentary procedure, for example exemptio