Legal opinion says Germany’s planned 20% spirits tax increase may violate constitutional and EU law

Germany’s spirits industry association said Tuesday that a legal opinion it commissioned found serious constitutional and European Union concerns with the planned 20% increase in the country’s excise tax on spirits, a measure scheduled to take effect on Jan. 1, 2027.

The opinion, prepared by AWB Law GmbH in Münster for the Bundesverband der Deutschen Spirituosen-Industrie und -Importeure, or BSI, argues that the increase would likely conflict with the equality principle in Germany’s Basic Law and with EU rules on the equal treatment of competing products. BSI said it is calling for the increase to be removed.

At the center of the dispute is a basic legal idea that similar situations should be treated similarly unless there is a strong reason to do otherwise. BSI said the legal opinion concludes that the planned tax change would deepen an existing difference in how alcoholic drinks are taxed without providing a sufficiently weighty and legally defensible reason for doing so.

Under the plan described by the association, the tax on spirits would rise to €15.64 from €13.03 per liter of pure alcohol. The opinion does not challenge the existence of historically different tax systems for beer, spirits, and other alcoholic drinks, according to BSI. Its objection is narrower. The lawyers argue that widening the gap further, especially between spirits and beer, requires a stronger justification than the one now on offer.

BSI said the opinion converted the beer tax to a comparable basis and found that the ratio of taxation on spirits relative to beer would rise to about 7.9:1 from about 6.6:1 if the change goes ahead. In the group’s view, that larger disparity raises the legal burden on the state to explain why spirits should face an even heavier relative tax load than they do now.

The association said the legal analysis draws on German constitutional case law holding that the goal of collecting more state revenue, or consolidating the budget, is not enough on its own to justify unequal treatment in taxation. If lawmakers want to use tax policy to influence public health behavior, the opinion says, that approach must also be necessary and designed in a way that respects equal treatment.

BSI said the lawyers pointed to several trends that, in their view, weaken the case for a higher spirits levy. Those include years of declining spirits consumption, a reduction in problematic drinking patterns, and lower alcohol consumption among young people. The opinion also raises the possibility that consumers could shift to other products if one category is taxed more heavily, which it says cuts against the idea of imposing an additional special burden on spirits.

The group also highlighted what it described as a tension between two possible policy aims. If the goal is to collect more tax revenue, the opinion says, a policy designed to reduce consumption may work against that by shrinking the tax base. If the policy successfully lowers sales, revenue would also fall, undermining the argument for dependable additional income.

On EU law, BSI said the opinion argues that member states do have room under European directives to set their own excise rates, but that discretion is not unlimited. The lawyers, according to the association, say governments remain bound by the broader principle of equal treatment and by Article 110 of the Treaty on the Functioning of the European Union, which restricts discriminatory internal taxation of products that compete with one another. In that reading, comparable drinks cannot be taxed in sharply different ways without an objective justification.

BSI also said the planned increase would affect more than traditional bottled spirits. Spirit-based mixed drinks with relatively low alcohol content would also be covered because the tax is tied to the amount of pure alcohol in the product, not only to the alcohol strength of the finished beverage. That point matters for companies selling ready-to-drink products, which have become an important part of parts of the alcoholic drinks market.

The issue has direct implications for the beverage sector as businesses prepare prices and contracts for 2027. A 20% increase in the spirits levy could affect margins, wholesale and retail pricing, and distribution planning for distillers, importers, retailers, and producers of spirit-based mixed drinks. It could also alter competitive differences between spirits and other alcoholic beverages that are taxed under different systems. If the measure proceeds and then becomes the subject of legal challenges, that could create added uncertainty both for companies planning production and sales and for the state’s own revenue assumptions.

BSI said the legal opinion adds a separate legal argument to criticism the association has already made on economic and health-policy grounds. Angelika Wiesgen-Pick, the group’s managing director, said the association is not seeking higher taxes on other beverage categories. She said the main question is whether the planned additional burden on spirits is legally sustainable, properly justified, and compatible with the principle of equal treatment.