Germany sugar tax: overview
- Germany has approved a draft sugar tax on soft drinks, with implementation proposed for July 2027.
- Drinks with 5g+ sugar per 100ml would face a two-tier levy, while some beverage categories would be exempt.
- The measure could increase costs, forcing manufacturers to review pricing and portfolio strategies.
- The tax is expected to encourage reformulation to reduce sugar content and lower levy exposure.
- If approved, Germany would join a growing number of European countries with sugar-sweetened beverage taxes.
The German government has approved a draft plan to introduce a tax on sugary drinks, with the proposed levy set to take effect on July 1, 2027, subject to parliamentary approval.
According to the finance ministry, the tax aims to reduce sugar consumption, generate revenue for the healthcare system and protect public health, “particularly of children and adolescents”.
The proposed tax would apply to drinks containing at least 5g of sugar per 100ml, with a rate of €0.26 per litre for drinks containing at least 5g and up to 8g of sugar per 100ml, rising to €0.32 per litre for those containing more than 8g.
The measures would cover soft drinks, energy drinks, lemonades, iced teas and sweetened fruit drinks. Pure fruit and vegetable juices, non-alcoholic beers and wines, and alcoholic drinks would be exempt.
What the tax means for manufacturers’ costs
Smaller manufacturers producing up to 70,000 litres annually would be exempt from the duty. A further exemption for businesses producing up to one million litres a year would require approval from the European Commission under state aid rules.
For manufacturers subject to the levy, the additional duty could affect production costs and pricing strategies. Businesses will need to assess whether to absorb the tax, pass some of the cost on to retailers and consumers, or adjust their product portfolios in response.
The German government expects the levy to generate around €690 million in 2027, rising to €925 million in 2028. The revenue is intended to help stabilise contributions to the statutory health insurance system.
The proposal has faced criticism over its potential economic impact. German public broadcaster ARD’s Tagesschau news service reported that Hessian Minister-President Boris Rhein of the Christian Democratic Union (CDU) argued that the tax would make drinks more expensive and could threaten jobs in the beverage industry.
Sugar tax puts reformulation in focus
The tiered structure could give manufacturers a financial incentive to reduce sugar content in products, particularly those close to the proposed thresholds. Companies could review existing recipes to assess whether reformulation would move products into a lower tax band or below the taxable threshold.
The UK’s Soft Drinks Industry Levy, introduced in 2018, provides an example of how a tiered tax can influence product formulation. The UK government reported that the average sugar content per 100ml in affected soft drinks fell by 28.8% between 2015 and 2018.
By early 2019, only around 15% of eligible soft drinks still contained enough sugar to be liable for the levy, down from 52% when the policy was first announced in 2016, according to the National Institute for Health and Care Research (NIHR).
Germany would join several European countries that already tax sugary drinks, including France, Portugal and Hungary. Hungary introduced a broader public health tax in 2011 covering certain products with high levels of sugar and other ingredients.
The World Health Organization (WHO) recommends taxing sugar-sweetened beverages as a public health measure, citing evidence that such taxes can increase prices and reduce purchases of taxed drinks. Depending on how a tax is designed, it can also encourage manufacturers to reformulate products to reduce sugar content.
However, the effectiveness of these measures remains contested. The US-based Tax Foundation questioned the evidence for improved health outcomes in a 2025 report, arguing that higher prices do not necessarily translate into significant improvements in health.
Germany’s proposal follows months of political debate. Earlier proposals reportedly considered extending the tax to a wider range of drinks, including some ready-made coffee products and beverages containing artificial sweeteners, prompting opposition from conservative politicians. The coalition ultimately settled on a two-tier structure, with the draft legislation now set to go before parliament.
If approved, the tax would give manufacturers until the proposed July 2027 implementation date to assess its potential impact on costs, pricing and product formulations.
