Tübingen a Small Town in Germany wins in Constitutional Court against Fast Food Packaging Waste

Unsuccessful constitutional complaint against Tübingen packaging tax statute

German Federal Constitutional Court

The complainant operated a fast food restaurant in the area of the university town of Tübingen. It filed an appeal against the taxation of the consumption of the disposable items used by it, which the Federal Administrative Court essentially rejected in its ruling of 24 May 2023.

The constitutional complaint lodged against this decision was unsuccessful. In particular, the packaging tax is also a ‘local’ consumption tax within the meaning of Art. 105 para. 2a sentence 1 of the German Basic Law (Grundgesetz - GG) insofar as the consumption of disposable items is taxed when selling ‘take-away meals or drinks’. The incentive to use reusable systems intended by the packaging tax statute also does not contradict any concept of federal waste law that has been relevant since its entry into force.

Facts of the case:

According to the packaging tax statute that came into force on 1 January 2022, the University City of Tübingen levies an excise tax on non-reusable packaging as well as non-reusable crockery and cutlery, provided that food and drinks are sold in or with it for immediate consumption on the spot or as a take-away meal or drink. The final seller of such food and beverages is obliged to pay the tax.

The complainant, which operated a fast food restaurant in the area of the university town of Tübingen, filed an application for a judicial review, in response to which the Administrative Court of Baden-Württemberg declared the packaging tax statute invalid in its ruling of 29 March 2022. Insofar as the tax was levied on disposable items used for the sale of food and beverages ‘as a take-away meal or drink’, there was a lack of ‘localisation’ of the consumption of these items within the meaning of Art. 105 para. 2a sentence 1 GG and thus a lack of legislative competence. This resulted in the overall invalidity of the statutes.

In its judgement of 24 May 2023, the Federal Administrative Court amended the judgement of the Administrative Court and essentially rejected the application for judicial review. The normative design of the taxable event, if properly understood, also ensures the constitutionally required local connection of consumption insofar as the tax liability is linked to the sale of food and beverages ‘as a take-away meal or drink’. The packaging tax is also compatible with the freedom of the final vendors to exercise their profession, which is protected by Art. 12 para. 1 GG.

The complainant is challenging this decision with its constitutional complaint.

Main considerations of the Senate:

The admissible constitutional complaint is unfounded. It is true that the levying of the packaging tax, which is designed as an incentive tax, interferes with the freedom of occupation of end sellers protected by Article 12(1) of the Basic Law. However, this interference is formally and substantively constitutional.

I. The University City of Tübingen can invoke the tax legislative competence of the federal states to levy local excise duties in accordance with Art. 105 Para. 2a Sentence 1 GG, Section 9 Para. 4 of the Baden-Württemberg Municipal Tax Act for the packaging tax statute. In particular, the packaging tax is a ‘local’ excise duty within the meaning of Art. 105 para. 2a sentence 1 GG.

1. according to § 1 para. 1 Alt. 1 of the Packaging Tax Statute, the tax liability is linked to the supply of disposable material that is used in the sale of food and beverages ‘for direct consumption on the spot’ and in this respect establishes the necessary local connection of consumption without further ado. Accordingly, although it cannot be ruled out that, in atypical cases, food and beverages are consumed at a distance from the place of sale outside the municipal area, such atypical behaviour does not call into question the fact that the requirement of a sale ‘for consumption on the spot’ covers the typical case of local consumption.

2. a) The locality can also be given for goods that are not ‘intended for consumption on the spot’ of the sale if the consumption typically takes place in the municipal area. In particular, the nature of the goods may speak in favour of this and the other circumstances, such as the supply structure or the size of the municipality, must be taken into account. A tax liability based on this presupposes that those goods are named in the taxable event or can be determined on the basis of specific criteria that are typically consumed within the boundaries of the respective municipality after the sale; the legislator has a margin of appreciation here.

II. the packaging tax of the University City of Tübingen does not violate any restrictions derived from the principle of the freedom of contradiction of the legal system or from the principle of federal loyalty.

1. According to the constitutional principle of freedom from contradictions in the legal system, the exercise of tax legislative powers to regulate an area governed by substantive law is only permissible if this does not render the legal system contradictory.

It can be left open what scope or concrete significance the principle of the legal system's freedom from contradiction has in its form as a barrier to the exercise of tax legislation competence for control in an area regulated by substantive law. This is because the steering purposes pursued with the packaging tax do not contradict the federal waste legislation in force since the packaging tax statute came into force on 1 January 2022, neither with regard to its overall concept nor with regard to specific individual regulations.

2. the levying of the packaging tax is also not precluded by the principle of federal loyalty in its form as a restriction on the exercise of competences with regard to the levying of the single-use plastic levy in accordance with the federal regulation of Section 12 of the Single-Use Plastics Fund Act. In any case, the packaging tax does not improperly deprive the Single-Use Plastic Fund of its financial basis.

III. there are no indications that the packaging tax of the University City of Tübingen, which is suitable and necessary to generate revenue, unreasonably impairs the freedom of occupation protected under Article 12(1) of the Basic Law. There are no indications that the packaging tax would have the effect of forcing businesses in the area of the University City of Tübingen to close down. In the constitutional complaint proceedings, no indications of increased business closures of affected companies following the entry into force of the packaging tax statute were presented.

The interference with the professional freedom of the final vendors by putting them into service as paying agents is also proportionate. This is suitable and necessary in order to be able to collect the packaging tax. The milder alternative of a tax liability that is not indirectly linked to the sale but directly to the consumption of the disposable items by the end consumer as the actual taxable item would not be practicable and therefore not an equally suitable means of achieving the objective.

Please find here the original press release in german.