Gas Prices Relief: The German Government's Move to Lower VAT on Fuel
Gas VAT increase from 19% to 7% announced
In an effort to help consumers cope with soaring gas prices, the federal government has decided to reduce the value-added tax (VAT) on gas. Chancellor Olaf Scholz announced on Thursday in Berlin that the VAT on gas will now be 7%, as opposed to the current 19%. This relief measure is scheduled to last until March 2024, running parallel with the gas surcharge of 2.4 cents per kilowatt-hour.
Scholz stated that this move would provide more relief than the burden imposed by surcharges, which also include billing and storage fees totaling an additional cent.
While the latest data suggests that this VAT reduction is part of a broader economic relief package worth €65 billion addressing energy costs and inflation, the exact duration of this specific measure isn't explicitly stated [1]. However, enrichment data indicates that the initial cuts were likely short-term in nature.
As the focus of recent coalition discussions (2025) shifts towards permanent reductions in electricity taxes and grid fees, the extension of gas VAT reductions is unclear beyond the earlier short-term relief [5]. The 2025 coalition paper prioritizes subsidies for energy-intensive industries and infrastructure streamlining rather than extending gas VAT reductions.
Research on the impact of VAT changes in Germany shows a partial pass-through to consumer prices, with effects varying by sector. While a reduced VAT rate would lower nominal costs for gas, the actual savings rely on supplier pricing behavior and concurrent energy market trends [2]. In sectors like hospitality, similar VAT changes have had varying impacts on consumer prices [3][4].
It is worth noting that the search results lack specifics on the current status of gas VAT rates as of 2025. Further consultation of German federal tax bulletins would be necessary for precise updated rates.
In conclusion, while a temporary 7% VAT rate on gas has been implemented, recent policy focuses on electricity costs, leaving the future of gas-specific VAT policies uncertain beyond the earlier short-term relief [1][5]. Keep an eye out for updates on this front.
- The German government, led by Chancellor Olaf Scholz, has reduced the Value-Added Tax (VAT) on gas from 19% to 7%, aiming to alleviate the burden of soaring gas prices on consumers.
- This VAT reduction is part of a broader economic relief package worth €65 billion, addressed towards energy costs and inflation, but the exact duration of the gas VAT reduction isn't explicitly stated.
- As the focus of recent coalition discussions (2025) shifts towards permanent reductions in electricity taxes and grid fees, the extension of gas VAT reductions beyond the earlier short-term relief is unclear.
- Research indicates that a reduced VAT rate would lower nominal costs for gas, but the actual savings rely on supplier pricing behavior and concurrent energy market trends.
- The future of gas-specific VAT policies is uncertain beyond the earlier short-term relief, with current policy focuses more on electricity costs. Keep an eye out for updates on this front.
