Economic booster or a gentle breeze? Amendment to the Energy and Electricity Tax Act to come into force on January 1, 2026

Background

In order to implement the self-imposed goals in the coalition agreement, the current federal government has revisited a legislative draft from the last legislative period (see Bundestag document 20/121351) aimed at modernizing electricity and energy tax law. On July 23, 2025, the Federal Ministry of Finance (BMF) published the draft bill for a “Third Act Amending the Energy Tax Act and the Electricity Tax Act” on its website (Dritten Gesetzes zur Änderung des Energiesteuer- und des Stromsteuergesetzes, see here). The act is set to largely come into force on January 1, 2026. The draft is currently undergoing consultations with the relevant associations and must still pass through the formal legislative process.

Electricity tax law has not kept pace with developments in the energy industry in some areas and no longer accurately reflects current developments in the field of electromobility and energy storage. With the aim of reducing bureaucracy, the need for adjustments to the legal framework has also become apparent in the recent past, particularly in the context of decentralized supply concepts.

The draft bill provides for the amendment of six laws and ordinances. We have summarized the key content relating to electricity tax below.

Key content

• The tax relief under Section 9b of the Electricity Tax Act (Stromsteuergesetz, StromStG) for companies in the manufacturing, agriculture, and forestry sectors will be permanently fixed at the EU minimum tax rate. This will remove the time limit on the electricity package, which provides for extensive reimbursement of electricity tax for the manufacturing sector and agriculture and forestry until December 31, 2025, and will thus continue to provide relief for potentially 600,000 companies throughout Germany.
• Electricity and energy tax law is to be brought into line with EU requirements and streamlined in the area of regulations relating to electricity generation. In the area of energy taxation, the national implementation of the EU requirement (see Article 14 of the Energy Taxation Directive) to exempt all energy products used for electricity generation is to be harmonized. To this end, Section 53 of the Energy Tax Act (EnergieStG) is to be amended and the relief specified therein is to be applied uniformly to the vast majority of energy products (while, for example, the relief for electricity generation previously regulated in Section 49 EnergieStG will be incorporated into this provision). The standardization is intended to reduce bureaucracy.
• In addition, electricity from biomass, sewage gas, and landfill gas will in future once again be legally exempt from electricity tax in installations with an electrical output of up to two MW without the need to establish a complex system for verifying the use of sustainable biomass for electricity tax purposes.
• In the context of electromobility, the end consumer fiction (Letztverbraucherfiktion) at charging points known from energy industry law is to be transferred to electricity tax law. This will eliminate the need for individual case reviews of complex business models “within the charging station” in the future and enable the operator of a charging station to be considered the end consumer when purchasing decentralized electricity (e.g., from a rooftop PV system) and thus benefit from electricity tax exemptions. This is an important relief for the urgently needed mobility transition.
• Clear guidelines will be created for bidirectional charging. This is intended to prevent electric vehicle users from becoming suppliers and tax debtors.
• The concept of electricity storage is to be redefined in a technology-neutral manner. Multiple taxation for electricity fed into and withdrawn from the grid is to be avoided comprehensively.
• In this respect, the previous privilege granted to electrochemical battery storage systems will be extended to all electricity storage systems, regardless of the storage technology used. In addition, it is envisaged for the first time that tax-free electricity generated and fed into an electricity storage system will remain tax-free when converted back in proportion to the total amount of electricity withdrawn for temporary storage in the assessment year.

The so-called plant coupling for decentralized electricity generation is to be abolished and, in future, the assessment of tax exemptions will be based uniformly on the location of the respective electricity generation plant. In addition, reporting and notification requirements in tenant electricity constellations are to be reduced.

Outlook

Even if the comprehensive electricity tax reduction hoped for by the business community and originally promised in the coalition agreement is unlikely to materialize, the proposed changes could have a noticeable impact on the business model, particularly for decentralized electricity supply models in combination with charging points and/or electricity storage systems.

Since much of the regulatory content was already the subject of a previous legislative draft, there is broad parliamentary consensus and it is likely to come into force on January 1, 2026.

Nevertheless, associations and organizations have criticized the legislative draft. It will be interesting to see whether and how the federal government responds to this criticism. Some of the comments submitted call for far-reaching changes. These have far-reaching financial implications (“electricity tax reduction for all”). The BMF's proposal to limit the electricity tax exemption for plants that generate electricity from biomass, sewage gas, or landfill gas to a capacity of two MW has also been met with criticism. The general exclusion of larger plants would put biogas plants and wood-fired power plants on an equal footing with coal and gas-fired power plants. Municipal operators of sewage treatment plants that convert the corresponding gases into electricity point out that the abolition of the tax exemption will lead to higher sewage charges. After all, the abolition of the tax break would contradict the new EU Urban Wastewater Treatment Directive. The BMF's intention to remove obstacles to decentralized power generation concepts, such as tenant electricity, is welcomed. However, clarification is requested for cases where tenant electricity models are implemented by energy service providers. It should be made explicitly clear that the tax break also applies in cases where an energy service provider acts as the operator or administrative service provider for a tenant electricity project.