Paying alcohol tax on a severance package

If you produce alcohol in so-called settlement distilleries, you must pay alcohol tax.

In Germany, alcohol may generally only be produced in distilleries that are sealed by the customs authorities (sealed distilleries). The amount of alcohol produced is measured to determine the tax to be paid. An exception to this principle are so-called settlement distilleries. Selling distilleries are not sealed and the alcohol tax is estimated on a flat-rate basis according to the type and quantity of raw materials processed.

You need a distillation permit in order to be allowed to produce alcohol in a severance distillery approved by the main customs office within a certain period of time. The distillation declaration with which you apply for the permit also serves as a tax return for the alcohol tax.

The tax amount is calculated on the basis of so-called yield rates, which are set out in a list of raw materials. The yield rate indicates the amount of alcohol that can be obtained from 100 kilograms or 100 liters of the raw material used. A reduced tax rate of currently EUR 1,022 per 100 liters of pure alcohol applies to the distillation of alcohol, but only within the framework of fixed quotas.

Example:

• You process 100 kilograms of apples. The yield rate for apples is 3.6, so you have to pay tax on a flat rate of 3.6 liters of alcohol. The reduced alcohol tax is 3.6 liters x 1,022 EUR /100 liters = 36.79 EUR.

Even if you do not operate the distillery yourself but, for example, have your self-produced fruit distilled in a settlement distillery (owner distillation), you must submit a settlement declaration and pay alcohol tax if applicable.

The alcohol enters free circulation for tax purposes when it is produced. This means that it can be traded within Germany without tax restrictions.

You can produce alcohol in your severance distillery on behalf of third parties from its raw materials (contract distilling).

Special rules apply if you wish to make use of simplified contract distilling. This procedure, which requires approval, allows you to produce alcohol "on a contract basis" at the expense of the quota of a distillery other than your own, without having to transport the raw materials to the other distillery. In this case, you produce the alcohol in your own distillery.

• Application for the settlement declaration

Forms: Yes

Written form required: Yes

Informal application possible: No

Personal appearance necessary: No

Online services available: Yes

The reduced rate of tax for the distillery only applies if

• the distillery is licensed and meets the necessary requirements,
• you have indicated that the alcohol is to be taxed
• you produce alcohol within certain quotas:
  • 300 liters of pure alcohol per calendar year for severance distilleries.

As a substance owner, you may not produce more than 50 liters of pure alcohol per calendar year.

• Appeal.
  You can find detailed information on how to lodge an appeal in your tax assessment notice.
• Appeal to the tax court

You can submit your alcohol tax declaration online or in writing by post:

Online declaration

• Log in to the customs administration's citizen and business customer portal
• The following online applications are available there:
  • Settlement declaration of settlement distillation (mealy substances)
  • Severance declaration of severance burning (non-floury substances)
• The online application will guide you through the next steps.
• The Stuttgart Main Customs Office will check your severance declaration.
• If the Stuttgart Main Customs Office can grant you a burning permit, you will receive a tax assessment notice together with the permit.
• In addition to the tax assessment notice, you will receive a pre-filled remittance slip which you can use to pay the tax.

Registration by post:

• Download the appropriate form for you from the customs administration website:
  • "Severance declaration of the severance burner for floury substances" (form 1219)
  • "Settlement declaration of the settlement distiller for non-floury substances" (form 1220)
  • "Severance declaration of the substance owner" (form 1221)
• Follow the instructions for completing the severance declaration and the specifications in the "Information sheet for severance distillers and substance owners" (form 1222).
• Complete the form in full and send it by post to the Stuttgart Main Customs Office.
• The next steps are the same as described for the written online procedure.

In principle, you will not incur any costs.
Late payment penalties are possible in the event of late payment.