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June 2, 2023

German Federal Administrative Court confirms legality of local packaging tax in city of Tübingen

  • Following a legal case challenging local packaging tax in the city of Tübingen, the German Federal Administrative Court confirms the legality of the tax.
  • Businesses operating in the city are required to pay the tax on certain single-use plastic items.
  • The case in Tübingen may open the door for further local packaging taxes in other cities in Germany and beyond in Europe.

Executive summary

On 24 May 2023, the German Federal Administrative Court (referred to as Court) confirmed the legality of a local packaging tax in the city of Tübingen. The tax applies to numerous single-use plastic items, including coffee cups, cans, bottles, boxes, bowls, cutlery, and ice cream spoons.

In detail

The packaging tax was introduced in 2022 and was implemented by the city of Tübingen to increase pricing of single-use packaging and promote the use of reusable food and drink packaging, cutlery and the like. In parallel, the city offered grants and incentives to support businesses in making the necessary investments (for example, installing dishwashers for tableware).

A number of businesses filed a lawsuit challenging the tax. Following publication of the Court's decision on 24 May 2023, there may be a further challenge by one of the plaintiffs. A number of other cities and communities will be following the Tübingen case with great interest. In localities where a local excise tax on packaging is deemed legitimate, it may be expected that applicable cities and communities may also implement similar taxes, absent regulation on a federal level.

Following this verdict, nongovernmental organizations may well intensify their lobbying activities at a federal level. It is worth noting that a Single-Use Plastics (SUP) levy has been adopted in Germany. The levy will be in force from 2024, with first declarations and payments due in 2025. During the final hearings in the SUP legislative process, representatives of cities and the association of communal businesses claimed the scope would be too narrow if the levy focused solely on SUP products. Whether the scope of the new SUP levy will be expanded to cover single-use packaging materials more broadly is yet unknown.

Potential wider implications

The verdict involving the city of Tübingen and the range of packaging taxes and regulatory developments across Europe seem to indicate that further development of packaging taxes is likely in the near future. Regulatory measures promoting or enforcing circular economy principles will likely increase.

Affected business taxpayers should closely monitor packaging regulatory and tax developments. Further, businesses should explore or potentially accelerate plans to introduce circularity concepts into business models, products and processes.

For additional information with respect to this Alert, please contact the following:

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor


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