Overview

• The Bundesrat finance committee says the planned VAT cut for restaurant meals and a broader commuter allowance would further tighten subnational budgets.
• The panel estimates 2026–2030 revenue losses of about €11.2 billion for states and €1.4 billion for municipalities, roughly half of the total effect.
• It recommends the Bundesrat press Berlin for compensation, with a vote on adopting this stance scheduled for Friday.
• The federal plan would reduce VAT on restaurant food from 19% to 7% and apply a 38‑cent per‑kilometer commuter allowance from the first kilometer starting 1 January 2026.
• Finance Minister Lars Klingbeil says there is no fiscal leeway to compensate the Länder, even as the measures reflect CSU priorities and follow earlier federal pledges to offset corporate tax relief.