Exemption of taxes for catering services and commuters effective from 2026

The German government has unveiled a series of tax relief measures as part of the coalition agreement between the CDU, CSU, and SPD. These changes, detailed in the draft of the Tax Adjustment Act 2025, are set to provide relief to volunteers, the gastronomy sector, and commuters, among others.

Firstly, volunteers will no longer have to pay taxes on their income up to a certain exemption limit, according to the draft. Additionally, the volunteer allowance is planned to increase from 840 euros to 960 euros starting January.

In the gastronomy sector, the value-added tax (VAT) on food will be permanently reduced from 19% to 7%, a move that was initially implemented at the beginning of 2024 and has now been made permanent. The reduced VAT rate for food was increased again at the beginning of this year.

The sales of the hospitality industry decreased by 3.7% in the first half of the year compared to the previous year. The federal government aims to strengthen voluntary commitment in this sector by increasing the coach and volunteer allowance.

Commuters will also see a change, with the commuter allowance increasing from 38 cents from the first kilometer. The allowance for the first 20 kilometers of the journey from home to work remains at 30 cents per kilometer, while from the 21st kilometer, 38 cents can be claimed.

However, these changes are expected to result in several billion euros in tax revenue losses not only for the federal government but also for the states. The federal budget is facing billion-dollar gaps due to these tax relief measures.

Negotiations between the federal government and the federal states regarding compensation for the multi-billion euro revenue losses caused by these tax relief measures are ongoing. The managing director of the industry association Dehoga, Ingrid Hartges, stated that the relief is important because it provides tax fairness towards takeaway food and food delivery.

On the other hand, environmental associations criticize the planned increase in the commuter allowance, stating that it mainly benefits the top ten percent of incomes. The NGG union also cautions that customers should not expect widespread price reductions in restaurants due to the tax relief.

These changes are part of the measures announced in the coalition agreement by the CDU, CSU, and SPD, and are currently under internal government consultation. The draft of the Tax Adjustment Act 2025 has been made available to the German Press Agency. The government emphasizes the financing reservation for all coalition agreement measures, including tax reliefs, and various commissions are working on stabilizing social systems financially to manage such impacts.