The abolition of the gas storage levy was intended to provide significant relief to gas customers, but it is now proving more expensive than announced. Instead of three billion euros, more than 3.5 billion euros flowed from the federal budget because value-added tax (VAT) is also involved. The Finance Ministry confirmed the higher sum upon inquiry, while behind the scenes an inter-agency dispute is escalating. Ultimately, this concerns a fundamental question of the fiscal state: Does the federal government even have to pay VAT to the tax office on its own compensation payment, and if so, who benefits from it? (welt: 13.02.26)
Did the ministry forget about VAT?
The additional costs stem from a calculation error in the responsible Ministry of Economic Affairs. When preparing the relief package, they assumed the payment would not be subject to VAT. Therefore, no funds were allocated for this item in the federal budget, even though the risk was foreseeable. Now, the Ministry of Finance has had to provide additional funding at short notice because the tax liability suddenly appeared like a second bill. As a result, the prestigious project appears less like a relief measure and more like an expensive administrative mishap.
The ministry nevertheless paid out the sum, albeit with a legal safeguard. “The payment was initiated on February 5, 2026,” a spokesperson explained. At the same time, it is “subject to full repayment, including interest,” should the tax authorities ultimately determine that no VAT liability exists. Thus, it remains unclear whether the half a billion euros is lost for good or will be recovered later.
Why Düsseldorf is now in the driver’s seat
The Düsseldorf tax office is crucial, as it is home to Trading Hub Europe GmbH (THE). This company plays a key role in the German gas market because, as the market area manager, it performs central functions in trading and settlement. THE also handled the measures taken during the 2022 energy crisis, when the state procured gas after the Russian attack on Ukraine to prevent shortages. At that time, the costs were passed on to consumers via the gas storage levy, which is why this instrument has remained politically sensitive from the outset.
For 2026, the center-right/center-left coalition decided to offset the negative balance in the levy account using tax revenue from the federal budget to lower gas prices. This offset has now been made, but not at the announced price. In addition to the outstanding €3,063,104,000, a further €581,990,000 in value-added tax (VAT) was added – more than half a billion euros extra. These figures come from a letter dated January 14 from Parliamentary State Secretary Dennis Rohde to the chairwoman of the Budget Committee, while the ministry internally acknowledged the error.
Shared tax makes the dispute so explosive
At first glance, the process seems trivial, as the state appears to be taxing itself. However, with VAT, this “left pocket” argument only partially applies because the revenue is distributed. Approximately 45 percent goes to the states, and another two percent goes to the municipalities. Therefore, of the approximately 582 million euros, not all of it ends up back in the federal budget; a large portion goes to the coffers of the states and municipalities.
This is precisely why the tax authorities’ decision is politically sensitive, even though it formally remains within the bounds of tax law. North Rhine-Westphalia would have a clear fiscal advantage through its agencies if the VAT liability remains in place. As a result, the gas surcharge effectively becomes an unplanned form of fiscal equalization, even though it was supposed to be abolished. And because the sum is so large, the dispute suddenly takes on a power dimension that extends far beyond the individual case.
Tax Secrecy, Silence, and an Open Ending
The tax authorities are responding evasively to specific questions, citing tax secrecy. The North Rhine-Westphalia Regional Finance Office stated: “Please understand that, due to tax secrecy (Section 30 of the German Fiscal Code), the tax authorities are generally not permitted to comment on individual cases.” This leaves the central question unanswered, even though it directly impacts the federal budget. Moreover, the silence prolongs the uncertainty, as budget planners and the public do not know whether the additional costs will be permanent.
For gas customers, the ultimate goal is relief, but for the government, control over billions of euros is paramount. This is precisely why the process is so unsatisfactory, as it erodes trust and simultaneously ties up funds. If the tax office denies liability, the federal government could reclaim the sum plus interest. If not, the half-billion euros will remain as an expensive reminder of how quickly a gas surcharge can be politically abolished but not financially resolved.