The German cabinet has approved draft legislation to tax sugar-sweetened drinks in the country from 1 July 2027. The sugar tax is intended to help fund the statutory health insurance system, easing pressure to raise contributions.
The German cabinet has approved draft legislation to tax sugary drinks in Europe’s biggest economy. If passed by the German Bundestag, the tax will take effect on 1 July 2027. The coalition aims to raise revenue for the federal budget while encouraging manufacturers to reduce sugar content and offer healthier products.
The levy is intended to ease pressure on the healthcare system, which faces costs of more than €2 billion every year linked to the high consumption of sugary drinks, which contributes to obesity, diabetes and tooth decay.
According to the federal government, Berlin is using the tax to implement “what associations from the fields of health, science, child protection, and consumer protection have long been demanding.”
The tax is expected to generate additional revenue for the federal government of €690 million in 2027 and €925 million in 2028.
According to the federal government, the revenue would help limit planned cuts to its subsidy to the central health fund, potentially easing pressure to raise people’s health insurance contributions.
Which drinks are subject to the tax, and who is going to pay more?
According to the draft legislation, drinks that would be subject to this tax include those with a total sugar content of 5g per 100ml or more. For drinks containing at least 5g but less than 8g per 100ml, the duty would be €0.26 per litre. At 8g per 100ml or more, it would rise to €0.32 per litre.
The list therefore includes soft drinks, such as Coca-Cola, iced teas, energy drinks, fruit nectars and juice concentrates with added sugar.
Alcoholic drinks and their non-alcoholic versions are not included in the plans. Milk, oat, and rice drinks, as well as pure fruit and vegetable juices, would also be exempt from the tax. Drinks containing sweeteners instead of sugar would also be excluded.
Although manufacturers or wholesalers would pay the tax, the federal government expects shoppers to face price increases of tens of cents for sugary drinks.
Small, independent manufacturers with an annual production volume of up to 70,000 litres would be exempt from this duty. A further exemption for businesses producing up to 1 million litres a year would require European Commission approval under state aid rules.
The tax faced criticism both before and after the coalition reached an agreement. According to German public broadcaster ARD’s Tagesschau news service, Hessian Minister-President Boris Rhein (CDU) said the tax would make drinks more expensive and could threaten jobs in the beverage industry.
The US-based Tax Foundation also questioned the health benefits of sugary drink taxes in a report published in 2025. They argued that, “While taxes on sugary drinks do seem to increase their prices, there is no evidence for significant improvement in health outcomes as a result of higher sugary drink prices.”
Germany would join several EU countries that already tax sugary drinks, including France, Portugal and Hungary, where a broader public health tax has been in place since 2011.
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