Germany BMF Press

German Cabinet Approves €1B Municipal Relief Law (LKEG)

The Bundeskabinett approved the Länder- und Kommunalentlastungsgesetz (LKEG) on 15 April 2026, committing to annual federal relief of €1 billion from 2026 through 2029 for Länder and their Kommunen. The relief package distributes funds across three mechanisms: approximately €250 million for financially weak states to reduce municipal liquidity credits, €350 million for eastern German states to offset DDR supplementary pension system costs, and €400 million for financially strong states through adjusted federal financial equalization tariffs. Combined with the €100 billion special infrastructure fund and €8 billion for educational infrastructure, total relief to Länder and Kommunen reaches approximately €25 billion through 2029.

Aviation Tax Rates Cut for All Distance Bands to Pre-May 2024 Levels

The German Federal Cabinet approved draft legislation on 1 April 2026 to reduce aviation tax (Luftverkehrsteuer) rates effective 1 July 2026, reverting to the levels in effect before 1 May 2024. Three distance-based tax bands are reduced: short-haul flights up to 2,500 km fall from €15.53 to €13.03, medium-haul 2,500–6,000 km from €39.34 to €33.01, and long-haul over 6,000 km from €70.83 to €59.43. The Ministry stated it is important that these reductions are passed on to travellers.

Germany and France Appoint Co-Chairs for Digital Finance Taskforce

Germany and France have appointed Tim Armbruster (Treasurer and Head of Financial Markets at KfW Bankengruppe) and Alain Demarolle (financial investor and former adviser to the French Prime Minister and Finance Minister) as co-chairs of the joint German-French Taskforce on the Future of Digital Finance. The taskforce, initiated on 19 January 2026, will examine how digital euro payments can strengthen European payment-system resilience and competitiveness, and how distributed ledger technology (DLT) can improve efficiency and deepen capital market integration. Interim results are planned for June 2026, with a full report expected in H2 2026.