Alcohol Tax: How Much Tax Is in a Bottle of Schnapps?

How Is the Alcohol Tax Calculated?

What's taxed isn't the bottle or the type of spirit, but the pure alcohol it contains. § 2 of the Alcohol Tax Act sets a standard rate of 1,303 euros per hectoliter of pure alcohol. Converted, that's 13.03 euros per liter of alcohol, calculated at 100% ABV. Whether the bottle contains kirsch, brandy, vodka, or Korn makes no difference to this rate.

The calculation is therefore simple: volume times alcohol content times tax rate. A 0.7-liter bottle at 40% ABV contains 0.28 liters of pure alcohol. Multiplied by 13.03 euros, that comes to about 3.65 euros. A half-bottle of fruit brandy at 0.5 liters and 38% ABV contains 0.19 liters of pure alcohol and carries about 2.48 euros. A full liter at 40% ABV comes to around 5.21 euros.

The tax typically becomes due at a bonded distillery when the alcohol leaves the tax warehouse and enters free circulation. For licensed small-scale distilleries and raw-material owners, customs sets it based on a flat-rate calculated alcohol quantity.

Reduced Rates: Small-Scale Distilling, Raw-Material Owners, Small Distilleries

Alongside the standard rate, the law provides for two reduced rates. For alcohol from licensed small-scale distilleries and from raw-material owners, a rate of 1,022 euros per hectoliter applies within the permitted quantities, meaning 10.22 euros per liter of pure alcohol. Small bonded distilleries that produce no more than 4 hectoliters of pure alcohol per year pay 730 euros per hectoliter, meaning 7.30 euros per liter.

For the same 0.7-liter bottle at 40% ABV, that works out to about 2.86 euros in tax from a licensed small-scale distillery, and about 2.04 euros from a small bonded distillery. The lower rate for small bonded distillers is a form of balance. Small-scale distillers only pay tax on the flat-rate calculated quantity, and anything they produce beyond that remains tax-free. A distillery under customs seal doesn't have this advantage, since every liter there is measured.

The reduced rates are justified by the goal of preserving traditional orchard meadows. Small distilleries should still be able to make use of fruit from old standard trees, even if they don't reach the volumes of a large distillery.

Value-Added Tax: Tax on Top of Tax

Alcohol tax is an excise tax. It's already baked into the price the trade calculates. On top of that price comes value-added tax of 19% at the end, calculated including the alcohol tax. So on the 3.65 euros of alcohol tax in a typical bottle, there's an additional roughly 0.69 euros in value-added tax.

When it comes to explaining why a brandy is expensive or cheap, though, the tax explains surprisingly little. It's just as high for a bottle of supermarket schnapps as for a kirsch made from old distilling cherries, as long as the volume and alcohol content are the same. What actually makes the difference is the raw material, the labor, the yield, and the aging. A brandy made from rowan berries requires many times more fruit per liter than a kirsch does.

Alcohol Tax Compared: Brandy, Liqueur, Wine, and Beer

Because the tax rate is based on pure alcohol content, weaker spirits carry less tax. A liqueur at 20% ABV in a 0.7-liter bottle contains 0.14 liters of pure alcohol and carries about 1.82 euros in alcohol tax, half as much as a fruit brandy at 40% ABV. Alcohol-free spirits aren't subject to alcohol tax at all.

Wine, beer, and sparkling wine are taxed in Germany under their own separate rules. Beer has its own beer tax, sparkling wine its own Schaumweinsteuer, and sherry and port their own intermediate product tax. Still wine, so far, remains free of any excise tax in Germany. Brandies therefore carry the heaviest tax burden per gram of alcohol, and that's exactly why customs authorities monitor their production so closely.

For comparison with a neighboring country: Austria levies a standard rate of 12 euros per liter of alcohol. From 2027, that will rise to 15.60 euros, putting it above the German rate.