Representatives from the CDU, CSU, and SPD reached an agreement on an immediate “energy relief program” during a coalition committee meeting over the weekend. According to the decision paper published Monday morning, the current focus of the federal government’s efforts is to quickly reduce fuel prices. In total, consumers are expected to see savings of approximately 1.615 billion euros on fuel costs. This will be achieved by lowering the energy tax on both diesel and gasoline by about 17 cents gross per liter, for a period limited to two months.
In conjunction with this, the coalition welcomed the European Commission’s announcement to examine measures concerning the oil and gas industry, similar to the 2022 EU energy crisis contribution. The funding for these tax reductions is planned to come from “antitrust or tax law measures concerning the oil and gas industry companies”. Furthermore, the coalition intends to strengthen competition law. As part of the proposed revision to the Act Against Restraints of Competition (GWB), the Federal Cartel Office’s operational scope will be expanded. This change would enable the office to collect data from stages preceding the final sale to end-users, thereby allowing for the faster detection of abusive practices. To ensure the availability of the necessary data, the government plans to oblige companies within the sector to cooperate.
Looking toward the long term, the coalition also aims to broaden the energy supply to reduce dependency in the energy sector. This includes utilizing domestic energy sources, such as tapping “selected domestic gas reserves”. Additionally, efforts will be made to advance renewable energy expansion, and the electricity grid connections with European neighbors will be upgraded.
However, Federal Chancellor Friedrich Merz (CDU) acknowledged that the state cannot solve every disruption arising from global politics. He noted, “That is why this support is limited to two months”. After this period, the previous tax rate will automatically resume. Merz added that, “to be honest, this means that prices will rise again, and prices will develop within these two months as well”.
Beyond the immediate energy relief, the coalition has also planned further relief for employees. Starting in 2026, employers will be allowed to pay a tax- and contribution-free relief bonus amounting to 1,000 euros. To compensate for the anticipated loss of tax revenue, the tobacco tax will be raised as early as 2026. With effect from January 1, 2027, the coalition plans to implement a “major reform” of the income tax to provide permanent relief for low- and middle-income earners.
Regarding the planned reform of the statutory health insurance, the coalition has not yet issued final determinations but has set a timeframe. The federal government intends to approve a corresponding draft law on April 29th, aiming to conclude the legislative process before the start of the parliamentary summer recess.