Order of 27 November 2024

R e a s o n s:

A.

1

The complainant, who as a franchisee operated a McDonald’s fast food restaurant in the City of Tübingen, challenges the taxation of the consumption of single-use products provided in connection with its food and beverage sales pursuant to the Bylaws of the City of Tübingen Introducing a Disposable Packaging Tax (Satzung der Stadt Tübingen über die Erhebung einer Verpackungssteuer – VStS; hereinafter: Packaging Tax Bylaws) of 30 January 2020, whose entry into force was postponed from 1 January 2021 to 1 January 2022 following an amendment to the Packaging Tax Bylaws of 27 July 2020. The aim of the bylaws is to generate income for the municipal budget, to reduce the amount of waste in the city generated by the disposal of ‘to-go’ packaging in public areas and to incentivise the implementation of reusable packaging. After the complainant’s franchise agreement expired in the spring of 2024, the complainant sold the restaurant.

I. 

2

The Packaging Tax Bylaws provide, in relevant part:

§ 1 Implementation of tax, items subject to tax

(1) Pursuant to the following provisions, the city of Tübingen levies a tax on the use of single-use packaging, dishware and cutlery insofar as food and beverages sold for consumption on the premises or as take-away food or beverages are provided with such single-use products (for example, hot food and beverages, ice cream from an ice cream parlour, salad with dressing and cutlery, beverages ‘to-go’).

(2) ‘Single-use’ within the meaning of section (1) includes, in particular, single-use packaging (such as single-use cans, bottles, cups and other single-use containers), single-use dishware (dishware without cutlery) and single-use cutlery (such as knives, forks and spoons) that is not subject to a mandatory deposit. Single-use packaging, dishware and cutlery are further defined as items to be used only once or only for a short period for the consumption on the premises of food and beverages (such as fast-food packaging or boxes for meals, sandwiches, salads or other food, or beverage containers).

§ 2 Taxpayer

Retailers of food and beverages within the meaning of section (1) are liable for the tax.

§ 3 Exemption from tax

The following items are exempt from the tax:

1. items returned in full to the taxpayer at the place of delivery and recycled outside of the public waste disposal system. The taxpayer must provide evidence of the return and waste material recycling upon request;

2. items used during markets, festivals and other events of limited duration, when the sale of food and beverages by the retailer during such events in the city does not exceed more than ten days in a calendar year.

§ 4 Tax rate and tax base

(1) The tax amounts to

1. for each single-use can, bottle, cup or other single-use container 0.50 EUR
        
        
2. for each piece of single-use dishware and other single-use food packaging 0.50 EUR
        
        
3. for each set of single-use cutlery 0.20 EUR 

(2) The maximum tax rate for a single meal is limited to EUR 1.50.

§ 5 Time at which tax liability arises, determination of the tax and time at which tax is due

(1) Liability for the tax arises at the time of the sale of food and beverages within the meaning of § 1.

(2) The period of taxation is based on the calendar year.

(3) The taxpayer shall have until 15 days after the end of the period of taxation to submit a tax return to the city administration using the form provided by the city.

(4) The city administration is authorised to estimate the tax liability and on the basis of such estimation issue a tax assessment if the taxpayer has not fulfilled their tax obligation or has not fulfilled such obligation in a timely, complete and correct manner.

(5) The tax is determined by the tax assessment and is payable within one month after notice of the tax assessment.

§ 6 Advance payment

(...)

§ 7 Obligations to maintain and provide records

(1) The taxpayer is required to maintain records, receipts and documentation regarding the purchase and sale of food and beverages within the meaning of § 1 for inspection.

(2) To the extent that the records, receipts and documentation do not describe the type and amount of the items taxable under these bylaws pursuant to § 1, the taxpayer must provide corresponding supplemental information.

§ 8 Tax audits and oversight provisions

The city administration is authorised to enter the business premises of the taxpayer and to review and require copies of business records be provided at any time if necessary for the review of the tax return or the determination of the criteria for taxation.

§ 9 Entry into force

(...)

II.

3

1. Following the complainant’s application for judicial review (§ 47 Code of Administrative Court Procedure, Verwaltungsgerichtsordnung – VwGO), the Baden-Württemberg Higher Administrative Court (Verwaltungsgerichtshof) declared the Packaging Tax Bylaws to be invalid by judgment of 29 March 2022 - 2 S 3814/20. It held that the single-use products within the meaning of § 1(1) second alternative of the Packaging Tax Bylaws provided with the sale of ‘take-away food or beverages’ did not qualify as products for ‘local’ consumption within the meaning of Art. 105(2a) first sentence of the Basic Law (Grundgesetz – GG), and that the city of Tübingen thus lacked the requisite legislative competence. The court found that it could not be assumed that the consumption of food and beverages purchased for ‘take-away’, and therefore also the associated disposal of single-use products, occurred within city limits. This led to the bylaws being invalid in their entirety, so that there is also no basis for tax liability on the sale of food and beverages ‘for consumption on the premises’ pursuant to § 1(1) first alternative of the Packaging Tax Bylaws. The court further found that the Packaging Tax Bylaws violate the principle that the legal order must be free of inner contradictions (Widerspruchsfreiheit der Rechtsordnung) because the federal waste disposal legislation, which is exhaustive, does not allow any room for the provisions to have their intended effect.

4

2. By judgment of 24 May 2023 - BVerwG 9 CN 1.22 -, the Federal Administrative Court (Bundesverwaltungsgericht) amended the judgment of the Higher Administrative Court. It declared § 4(2) of the Packaging Tax Bylaws invalid due to a violation of the principle of specificity and declared § 8 of the Packaging Tax Bylaws invalid due to a violation of Art. 13(1) of the Basic Law (due to the right of access not being limited to regular business hours); it otherwise rejected the application for judicial review. [...]

5-6

[…] 

7

3. The complainant lodged challenges to each of the tax assessments issued against it; by agreement of the complainant and the city of Tübingen, these proceedings were paused pending a decision from the Federal Constitutional Court.

III.    

8

The complainant asserts a violation of its freedom to practice an occupation under Art. 12(1) of the Basic Law and, alternatively, its general freedom of action under Art. 2(1) of the Basic Law, and a violation of its fundamental right under Art. 3(1) of the Basic Law, to the extent the Federal Administrative Court rejected its application for judicial review.

9-14

[…]

IV.    

15

The city of Tübingen provided a statement in the constitutional complaint proceedings. [...]

B.

16

The complainant asserts an admissible claim for violation of occupational freedom protected by Art. 12(1) of the Basic Law.

I.    

17

1. In order to have standing, a complainant must assert that the challenged acts of public authority amount to a violation of one of the fundamental rights or equivalent rights set out in Art. 93(1) no. 4a of the Basic Law and § 90(1) of the Federal Constitutional Court Act (Bundesverfassungsgerichtsgesetz – BVerfGG), and that they are individually, directly and presently affected by this violation. In accordance with § 23(1) second sentence, § 92 of the Federal Constitutional Court Act, it must be sufficiently substantiated that such a violation may have occurred (cf. Decisions of the Federal Constitutional Court, Entscheidungen des Bundesverfassungsgerichts – BVerfGE 89, 155 <87>; 123, 267 <329>).

18

2. a) These requirements are present with respect to a claim for violation of Art. 12(1) of the Basic Law. The constitutional complaint demonstrates the possibility of the violation of fundamental rights by the challenged judgment in a sufficiently substantiated manner, insofar it constitutes a decision on the imposition of the taxes, including the associated administrative burdens.

19

b) This is not the case, however, with regard to the claim that the judgment violates Art. 3(1) of the Basic Law. [...]

20

[...] [The] possibility of a violation of Art. 3(1) of the Basic Law [is] not sufficiently substantiated. According to the case-law of the Federal Constitutional Court, assessing a tax based on the units of packaging used corresponds to the concept of a consumption tax because it encompasses the expected purchasing power involved in the consumption (cf. BVerfGE 98, 106 <124>; para. 39 f.). The constitutional complaint does not demonstrate that the consumers’ purchasing power would be considered in the same way if the tax liability was not based on units of packaging, but instead on the items’ volume or weight. Further, the constitutional complaint does not address the issue of whether, in addition to justifying differentiations in the assessment of taxes under the principle of equality (cf. BVerfGE 93, 121 <147; 117, 1 <32>; 135, 126 <151 para. 79>), the incentivising effects of taxation can also justify differentiations – such as, in this case, an obligation to assess the tax based on the volume or the weight of the single-use packaging. Moreover, the packaging tax is intended to create incentives to avoid the use of single-use products as much as possible, or to have the material returned to the point of sale and recycled outside of the public waste disposal system (§ 3 no. 1 Packaging Tax Bylaws). In terms of these incentivising effects of the tax, however, there are also substantive reasons to have the tax assessed on the basis of the units of packaging provided. Finally, the constitutional complaint fails to address the issue of whether administrative practicality can justify assessing the tax based on the number of units of single-use packaging provided rather than by their respective volume or weight.

II.

21

The complainant has exhausted all legal recourse. [...]

III.    

22

The fact that the complainant ceased operating its restaurant after the expiry of its franchise and leasing agreement on 1 April 2024 does not call its legal interest in bringing an action into question. The challenged judgment was issued against it and the resulting disadvantage did not cease to apply due to the closure of the business (cf. BVerfGE 25, 256 <262>; 56, 296 <297>). The complainant indirectly challenges the Packaging Tax Bylaws, on the basis of which tax assessments were issued against it. In this regard, the decision on the constitutional complaint may therefore have an effect on the finding of the complainant’s tax liability (cf. BVerfGE 98, 106 <116>).

IV.    

23-25

[…]

C.

26

The constitutional complaint is unfounded. It is true that the disposable packaging tax, which is designed as an incentive tax, interferes with retailers’ occupational freedom under Art. 12(1) of the Basic Law both in that it requires retailers to collect the tax and in that it imposes a payment obligation (see I. below). The interference is nevertheless justified because the Packaging Tax Bylaws of Tübingen, to the extent they are permissibly challenged, are both formally (see II. below) and substantively (see III. below) constitutional. For this reason, the judgment of the Federal Administrative Court rejecting the complainant’s application for a declaration that the Packaging Tax Bylaws are void is also not objectionable.

I.    

27

The obligations imposed on retailers by the Packaging Tax Bylaws interfere with occupational freedom.

28

1. Art. 12(1) of the Basic Law guarantees all Germans a comprehensive fundamental right to freely choose and practice their occupation as the basis for their personal and economic life (cf. BVerfGE 101, 331 <346 f.>). In accordance with Art. 19(3) of the Basic Law, occupational freedom also extends to domestic legal entities under private law (cf. BVerfGE 97, 228 <253>; 161, 63 <89 para. 43> - Wind farm participatory companies). ‘Occupation’ is any activity that is practised on a long-term basis and serves to create and maintain a livelihood (cf. BVerfGE 155, 238 <276 para. 92> - Offshore Wind Energy Act; 163, 107 <133 para. 71 - Veterinary prescription requirement). One manifestation of occupational freedom is the ‘freedom of enterprise’, understood as the right to freely found and operate a business, which also includes the freedom to design the business organisation and contractual relationships and to commercially profit from services provided (cf. BVerfGE 161, 63 <89, para. 43> with further references). Constitutional review of taxes is conducted under Art. 12(1) of the Basic Law if such taxes objectively have a regulatory effect on an occupation (cf. BVerfGE 162, 325 <346 para. 79>). This is always to be assumed when the incentivising effects of a tax are aimed at influencing the manner in which the occupation is practiced (cf. BVerfGE 16, 147 <163>; 31, 8 <26 f.>; 38, 61 <85>; 162, 325 <346 para. 79>).

29

2. On this basis, the obligations imposed on retailers by the Packaging Tax Bylaws directly interfere with occupational freedom due to their incentivising effects.

30

The obligation to pay tax pursuant to § 5(5) of the Packaging Tax Bylaws is not reviewed according to the standard of the general freedom of action under Art. 2(1) of the Basic Law (cf. BVerfGE 161, 1 <34 para. 67> on lodging taxes without an incentivising effect), but instead according to Art. 12(1) of the Basic Law. It has a regulatory effect on retailers. This is because the intended effect of the financial burdens resulting from the obligation to pay tax is for the retailers to change their way of doing business, namely, to switch to a system of reusable food packaging or to accept the return of single-use products at the point of sale and to recycle such material outside the public waste disposal system (§ 3 no. 1 Packaging Tax Bylaws). The burdens that result from the fact that retailers must calculate, report and collect the tax (§§ 2, 5(3) Packaging Tax Bylaws) are a part of this effect to change the way in which business is conducted. They also adversely affect occupational freedom.

II.

31

The interference in Art. 12(1) of the Basic Law is only justified if it has a formal constitutional basis (cf. with regard to Art. 2(1) of the Basic Law BVerfGE 161, 1 <34 para. 68 with further references>). This requirement is met here. The Packaging Tax Bylaws fall within the power to enact tax legislation under Art. 105(2a) first sentence of the Basic Law; the provisions challenged here relate to taxes within the legislative competence granted by constitutional law governing public finances (see 1. a) below) in the form of a consumption tax (see 1. b) below), which is not the same as taxes governed by federal law (see 1. c) below) and which meet the criterion that consumption must be local (see 1. d) below). The exercise of this legislative competence is not subject to any of the limitations imposed by the principles that the legal order must be free of inner contradictions (see 2. a) below) or loyalty within the federal order (Bundestreue) (see 2. b) below).

32

1. The city of Tübingen can base the Packaging Tax Bylaws on the competence of the Länder to legislate with regard to local taxes on consumption under Art. 105(2a) first sentence of the Basic Law. The Land Baden-Württemberg has authorised municipalities to exercise such competence under § 9(4) of the Baden-Württemberg Municipal Levies Act (Kommunalabgabengesetz Baden-Württemberg) (cf. BVerfGE 161, 1 <31 f. para. 62> with further references on the constitutionality of such authorisation).

33

a) The taxes levied by the Tübingen Packaging Tax Bylaws are taxes within the legislative competence granted by constitutional law governing public finances under Arts. 105 and 106 of the Basic Law.

34

aa) According to established case-law of the Federal Constitutional Court, the term ‘tax’ in the Basic Law is based on the definition set out in § 3(1) of the Fiscal Code (Abgabenordnung – AO). According to that definition, taxes are ‘payments of money, other than payments made in consideration of the performance of a particular activity, which are collected by a public body for the purpose of raising revenue and imposed by the body on all persons to whom the characteristics on which the law bases liability for payment apply’. It is thus a defining feature of a tax that it is levied without individual consideration [for particular services] and independent of a specific purpose to raise funds for the general financial needs of public bodies (cf. BVerfGE 149, 222 <249 para. 53>).

35

In principle, the legislator can use its legislative competence regarding tax matters for the purpose of incentivising or disincentivising certain conduct. However, the legislative competences regarding tax matters under constitutional law governing public finances do not provide a sufficient legal basis when the incentive or disincentive created by the tax is more like a binding rule of conduct in its severity and effect. That is the case when the tax law is almost completely at odds with its conceptual purpose of raising revenues due to the fact that it is obviously aimed at making the conduct giving rise to the tax economically infeasible, thus replacing the revenue generating function of a tax with an administrative function in the nature of a prohibition (cf. BVerfGE 16, 147 <161>; 31, 8 <23>; 38, 61 <81>; 98, 106 <117 f.>; 135, 126 <142 para. 47>).

36

bb) Based on this standard, the provisions here constitute a tax within the legal sense. The Packaging Tax Bylaws establish a common burden that is imposed on all who meet the tax criteria set out in the bylaws. They are levied independently of individual considerations and serve to finance the general needs of the municipality (cf. BVerfGE 98, 106 <123>).

37

It is true that the Packaging Tax Bylaws are intended as an incentive in order to curb the disposal of rubbish in the city and also to curb the use of single-use dishware and cutlery. However, the design and amount of the tax provisions do not have the practical effect of a ban on providing single-use products for the sale of food and beverages. It does not appear that the retailers of food and beverages subject to the Packaging Tax Bylaws would typically be forced to switch to a multi-use system of packaging or forced to take back the single-use products that they use (§ 3 no. 1 Packaging Tax Bylaws) because the operation of their businesses was no longer economically possible otherwise. No indications of such an effect - such as a severe decrease in the use of single-use products since the Packaging Tax Bylaws’ entry into force - have been submitted. Nor does the fact that the tax is imposed in such a way that the burden is passed on to the consumer as the end payer result in it acting as a de facto ban (see para. 40 below). The specific situation of the complainant, which contends that in the market segment of low-priced food and beverages in which it conducted business, increases in taxes can only be passed on to the consumer to a limited extent, does not make a difference with regard to the legislative competence to enact such tax. (see para. 75 ff. with regard to reasonableness).

38

b) The disposable packaging tax is a tax on consumption within the meaning of Art. 105(2a) first sentence of the Basic Law.

39

aa) Consumption taxes are taxes which are levied on the use of specific physical goods, generally goods for consumption on the premises or short-term use (BVerfGE 98, 106 <123 f.>). They are intended to be levied on the consumer’s purchasing power at the specific time of consumption (cf. BVerfGE 98, 106 <124>; 145, 171 <214 para. 119>). Consumption is to be assumed when the product is either non-existent or effectively useless or worthless following its use (BVerfGE 145, 171 <217 para. 129>).

40

For reasons of practicability, consumption taxes are usually not directly imposed on the person consuming the product, but instead are indirectly imposed through retailers. At the same time, it is intended that the tax burden ultimately be passed on to the consumers. The indirectly levied consumption tax is therefore designed to be passed on to the consumer, whose purchasing power is targeted for taxation (cf. BVerfGE 98, 106 <124>; 145, 171 <214 para. 119>).

41

bb) The disposable packaging tax is a consumption tax (cf. already BVerfGE 98, 106 <123 f.>). The subject of the tax is the use of single-use products that are not used or retained on a long-term basis and instead are intended for a single use (§ 1(2) second sentence Packaging Tax Bylaws). Contrary to the view of the city of Tübingen, the decisive consumption for purposes of the tax does not occur when non-reusable items are provided to the consumer with the food and beverages. It is true that, from the perspective of the retailer, the disposable packaging loses its function as a means to provide food and beverages to the customer once provided. However, this does not apply to the packaging’s function with regard to the customer, which is to facilitate the transport and ultimate consumption of the food and beverages. Single-use cutlery, which is also subject to the tax, has no function with regard to sales whatsoever. The primary use of the single-use items is with regard to the consumption of the food and beverages. After this point, the single-use items have no further function. They become rubbish, which has no economic value for the consumer (cf. BVerfGE 98, 106 <124>).

42

c) The disposable packaging tax is not equivalent to any tax governed by federal law.

43

aa) From the outset, the prohibition against introducing local taxes equivalent to existing federal taxes as contained in Art. 105(2a) first sentence of the Basic Law does not apply to taxes on consumption and expenditures (cf. BVerfGE 40, 56 <64>; 65, 325 <351>; 98, 106 <125>; 161, 1 <42 para. 93>) that were common at the time of the 21st Act to Amend the Basic Law of 12 May 1969 (Federal Law Gazette, Bundesgesetzblatt - BGBl I p. 359 - Finance Reform Act). New taxes on consumption and expenditures – like the disposable packaging tax here – also do not violate the prohibition against local taxes equivalent to existing federal taxes, at least when such local taxes have no federal equivalent according to the traditional understanding of equivalence (cf. BVerfGE 65, 325 <351>). What is impermissible is a double burden on the same taxable source. The facts giving rise to the imposition of a local tax cannot be applied for the same reasons as a federal tax; they must differ from the federal tax with regard to the item subject to tax, the method of assessment, the way in which the tax is imposed and its economic effect (cf. BVerfGE 65, 325 <351>; 98, 106 <125>; 161, 1 <42 para. 93>).

44

According to the clear wording of Art. 105(2a) first sentence of the Basic Law, the prohibition against local taxes equivalent to existing federal taxes only relates to those federal income provisions that can be considered taxes. Levies or other income provisions that are not taxes, but are based on the federal legislative powers in other areas, do not have any precedence over local taxes on consumption and expenditures that are imposed on the same source. This is consistent with the constitutional law governing federal public finances, which does not provide the legislator with the option to choose between enacting a tax or enacting non-tax levies on the basis of its other powers. Rather, it is assumed that in principle, common burdens should be financed through taxes according to the detailed rules of Art. 105 ff. of the Basic Law with regard to the division of legislative, administrative and revenue raising competences among the Federation, the Länder and municipalities (cf. BVerfGE 55, 274 <300 ff.>; 78, 249 <266 f.>; 92, 91 <113>; 124, 235 <243>; 135, 155 <206>). It is therefore not possible to interpret the prohibition against local taxes equivalent to existing federal taxes in a way that extends to non-tax levies or other income provisions.

45

bb) Based on the foregoing, the disposable packaging tax is not barred by the prohibition against local taxes equivalent to existing federal taxes.

46

(1) The disposable packaging tax does not have the same taxable source as the federal value-added tax. The disposable packaging tax imposes a tax burden on the use of packaging based on number of units, while the value-added tax is imposed on the good or service provided. The basis on which the value-added tax is imposed corresponds to demand, for which the value is specified by the sales price, in contrast, the basis on which the disposable packaging tax is imposed is the number of single-use items used. The disposable packaging tax and the value-added tax are therefore imposed on different tax bases (cf. BVerfGE 98, 106 <124 f.>).

47

(2) Contrary to the view put forward by the complainant, the disposable packaging tax is also not invalid due to an equivalence with the federal levy on single-use plastics under § 12 of the Act on the Fund to Address the Negative Impacts of Single-Use Plastics (Einwegkunststofffondsgesetz, hereinafter: the ‘Act’). This levy, which is imposed on producers of single-use plastic products, is not a federal tax that could supersede the disposable packaging tax as a consumption tax according to the prohibition against local taxes equivalent to existing federal taxes. The levy on single-use plastics is not imposed independently of a specific purpose to cover the general financial needs of the Federation (on the category of ‘taxes’ see para. 34 above). Rather, the proceeds of this levy go to the Fund to Address the Negative Impacts of Single-Use Plastics administered by the Federal Environment Agency. The purpose of this fund is to cover the costs involved in remedying the negative effects of single-use plastic products on the environment and human health (§ 1, § 3 no. 12 through 16, § 4(1), § 5, §§ 14-16 of the Act). In the present case, the exact classification of the levy on single-use plastics as a non-tax levy is irrelevant.

48

d) The Tübingen disposable packaging tax is a ‘local’ tax on consumption within the meaning of Art. 105(2a) of the Basic Law. § 1(1) of the Packaging Tax Bylaws links the obligation of retailers to pay the tax with sales, with regard to which the locality of the consumption of the single-use items along with the food and beverages is sufficiently set out in the provision; in the present constitutional complaint proceedings, the interpretation of the criteria for taxation by the Federal Administrative Court is to be adopted (see para. 54 below).

49

aa) The ‘locality’ of a consumption tax within the meaning of Art. 105(2a) first sentence of the Basic Law that is not directly imposed on consumption, but instead indirectly on the sale of goods is only present when the criteria for taxation realistically describe goods that are typically consumed in the municipality. This is the case whenever the constituent elements for the imposition of a tax obligation are linked to the sale of goods intended for ‘consumption on the premises’ (cf. BVerfGE 16, 306 <327 f.>; 98, 106 <125>).

50

Goods that are not intended for ‘consumption on the premises’ can still be local if they are typically consumed in the municipality. This can be indicated by the characteristics of the goods; other factors that should be taken into account include the size of the municipality or its infrastructure. Liability for such a tax requires that the legislation lists the goods that are typically consumed within the municipality following their sale, or specific criteria based on which such goods can be determined; the legislative authority has a margin of appreciation in this regard.

51

bb) In light of this, the Packaging Tax Bylaws of the city of Tübingen, as interpreted by the Federal Administrative Court, ensure the required locality.

52

(1) Pursuant to § 1(1) first alternative of the Packaging Tax Bylaws, liability for the tax is based on the supply of single-use products for the sale of food and beverages ‘for consumption on the premises’. In this regard, the criterion that consumption must be local is readily met. In enforcing the bylaws, a determination must be made as to those sales transactions in which, according to the circumstances, it can be concluded that consumption will take place directly at the point of sale; further criteria for taxation are not required. While it is not ruled out that, in atypical cases, the food and beverages, and therefore also the single-use items, might be consumed away from the point of sale and outside the municipality, such atypical conduct does not call into question that the criterion of selling ‘for consumption on the premises’ covers the typical case of local consumption (cf. BVerfGE 98, 106 <124>).

53

(2) In these constitutional complaint proceedings, the interpretation of the Federal Administrative Court is to be used as the basis for linking the tax obligation to the supply of single-use products for the sale of ‘take-away food and beverages’ under § 1(1) second alternative of the Packaging Tax Bylaws (see (a) below). Pursuant to this interpretation (see (b) below), the locality within the meaning of Art. 105(2a) first sentence of the Basic Law is also met (see (c) below).

54

(a) The Federal Administrative Court interpreted the provision in conformity with the Constitution; this interpretation should be adopted in these constitutional complaint proceedings. The complainant has not sufficiently substantiated that this interpretation exceeds the boundaries set by the wording of the provision and the clearly recognisable intent of the legislator (cf. BVerfGE 138, 64 <94 para. 86>; 149, 126 <154 f. para. 72 ff.>).

55

(b) The Federal Administrative Court assumes that § 1(1) second alternative of the Packaging Tax Bylaws, according to an interpretation in conformity with the Constitution, only applies to the sale of food and beverages intended for consumption on the premises and does not apply to the sale of food or beverages in sealed or factory-packaged containers. It therefore extends to single-use items for those food and beverages which are consumed within a short distance of the point of sale.

56

(c) Under this interpretation, the taxation criteria in the provision are linked to sufficiently specific criteria defining the locality of the consumption that is the basis for the tax (see (aa) below); there are no indications that the tax obligation is not limited to single-use items typically used in the area of the city of Tübingen (see (bb) below).

57

(aa) According to the interpretation by the Federal Administrative Court, the tax is only payable when single-use products are supplied for food and beverages that are typically consumed directly after purchase, because their temperature, texture and freshness, which are decisive for their quality, are negatively impacted after even a short amount of time (cf. Decisions of the Federal Administrative Court, Entscheidungen des Bundesverwaltungsgerichts – BVwerGE 179, 1 <7 f. para. 21>). Based on these criteria, the ‘take-away food and beverages’ that are provided with single-use products resulting in liability for the tax can be determined with sufficient certainty.

58

(bb) It is not objectionable under constitutional law that the Federal Administrative Court, at least implicitly, assumed, based on the facts established by the Baden-Württemberg Higher Administrative Court, that the criteria set out in the bylaws realistically reflect the local nature of the tax.

59

The Baden-Württemberg Higher Administrative Court assumed that the ‘quick’ consumption of take-away food and beverages most frequently occurred within city limits (cf. Judgment of 29 March 2022 - 2 S 3814/20 -, para. 112). The Federal Administrative Court further tenably assumed that the consumption of such food and beverages takes place within a short amount of time and therefore usually within the municipality. The complainant did not submit sufficiently specific evidence that could disprove this assumption. In particular, the typology of the consumption of the taxable goods is not determined by the situation in each individual place of sale, but by all the sales in the municipality (cf. BVerfGE 98, 106 <124>).

60

2. The exercise of the competence to enact tax legislation granted under Art. 105(2a) first sentence in the form of the disposable packaging tax in the city of Tübingen does not breach any limitations derived from the principle that the legal order be free of inner contradictions (see a) below) or from the principle of loyalty within the federal order (Bundestreue) (see b) below).

61

a) The disposable packaging tax in the city of Tübingen complies with the principle, derived from the rule of law, that the legal order be free of inner contradictions.

62

aa) Certain limitations on the exercise of legislative competences in the federal order have been derived from the principle that the legal order be free of inner contradictions, including that the exercise of the legislative competence with regard to taxes designed to create incentives or disincentives in an area governed by substantive law is only permissible if this does not lead to contradictions within the legal order. If the tax incentive or disincentive would result in contradictions with existing laws enacted by the competent legislator as to a particular matter, then the legislator deciding on tax matters may not enact such a tax. Consequently, the legislator deciding on tax matters may only enact taxes that have an incentivising or disincentivising effect and therefore indirectly relate to another area of legislative competence insofar as this effect does not contradict either the overall legislative concept of the other legislation or its specific provisions (cf. BVerfGE 98, 106 <118 f.>).

63

bb) In the present proceedings, the extent or specific significance of this manifestation of the principle that the legal order be free of inner contradictions (cf. BVerfGE 141, 1 <35 para. 81>) – which has been subject to criticism in the legal scholarship ([…]) – need not be decided. This is because the incentives that the disposable packaging tax intends to create – namely, to encourage retailers to switch to reusable containers and cutlery or to accept returns of the single-use items and recycle them outside of the public waste disposal system (§ 3 no. 1 Packaging Tax Bylaws) – do not run counter to the overall concept or specific provisions of federal waste legislation that has been applicable since the entry into force of the Packaging Tax Bylaws on 1 January 2022 (on the relevant time period cf. BVerwGE 179, 1 <10 para. 28>).

64

(1) Since the enactment of the Packaging Tax Bylaws, the incentives created by the disposable packaging tax do not contradict any part of the legislative concept in the relevant area of waste disposal law.

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In its decision on the packaging tax bylaws of the city of Kassel, the Federal Constitutional Court assumed that the incentive on retailers produced by the tax to change to a system of reusable containers and cutlery or to accept returns of the single-use items and recycle them outside of the public waste disposal system conflicted with the principle of cooperation inherent in the waste disposal law applicable at the time, according to which the goals set by waste disposal law to prevent, minimise and recycle waste should not be implemented through regulatory law or individual measures, but instead should primarily be implemented through the voluntary cooperation of businesses. In this regard, reference was made to § 14(2) of the Waste Management Act 1986 (Abfallgesetz – AbfG 1986), according to which the goals of the waste management law were only to be implemented through regulatory law after cooperative efforts had failed (cf. BVerfGE 98, 106 <128 ff.>). However, in the relevant time period since the enactment of the Tübingen Packaging Tax Bylaws on 1 January 2022, a comparable subsidiarity clause, which could be impaired by individual ‘piecemeal solutions’ for the reduction of packaging waste, no longer exists; in particular, § 26 of the Circular Economy Act (Kreislaufwirtschaftsgesetz – KrWG), which is the present equivalent of the prior § 14(2) of the Waste Management Act 1986, now only concerns cooperation with regard to recycling and therefore no longer involves the goal primarily pursued by the Tübingen disposable packaging tax, which is preventing waste (cf. BVerwGE 179, 1 <13 f. para. 37 with further references>). For this reason, a principle of cooperation of the kind that formed the basis for the prior decision of the Federal Constitutional Court can no longer be derived from the waste disposal law.

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The overarching principle of cooperation in waste disposal law has been superseded by a complementary combination of cooperation, regulatory law and economic incentives to bring about the goals of waste disposal law, as to which the disposable packaging tax’s incentives aimed at the conduct of individual retailers could not come in conflict with. For example, a regulatory law effect can be observed in the Federal Government’s implementation of Art. 5 and Art. 14 of the Single-Use Plastics Directive (Directive (EU) 2019/904 of the European Parliament and of the Council of 5 June 2019 on the reduction of the impact of certain plastic products on the environment) through the ‘Ordinance prohibiting certain single-use plastic products and products from oxo-degradable plastic from being placed on the market’ (Ordinance Prohibiting Certain Single-Use Plastics, Einwegkunststoffverbotsverordnung – EWKVerbotsV) adopted on 24 June 2020, which pursuant to its § 3(1) nos. 2, 3 and 7 bans certain single-use plastic products such as cutlery, dishes and containers from being brought on the market. Above all, waste disposal law now includes the instrument of economic incentives to reduce packaging waste, which is comparable to the incentivising effects of the disposable packaging tax. Among these are the measures listed in Annex 5 of the Circular Economy Act ‘for creating incentives for the use of a waste hierarchy’, which are referenced in § 6(3) of the Circular Economy Act, as well as ‘tax incentives’ (no. 3) and ‘tax measures’ (no. 9). Another possible part of the waste avoidance programme pursuant to § 33(1) of the federal Circular Economy Act are ‘economic instruments, such as incentives for environmentally-friendly shopping or the introduction of a fee to be paid by consumers for packaging items that would otherwise be offered free of charge’ (no. 3 letter a of Annex 4 to § 33 Circular Economy Act). The measures which could be taken under this provision could include the introduction of a federal disposable packaging tax (cf. BVerwGE 179, 1 <14 para. 40 with further references>; cf. also Waste avoidance programme of the Federation with participation by the Länder, July 2013, p. 58 f.: ‘Taxation of waste intensive products’). In addition, Art. 4(1) of the Single-Use Plastics Directive also includes measures that can be adopted by Member States to reduce the use of single-use plastic items, among them ‘economic instruments such as instruments ensuring that those single-use plastic products are not provided free of charge at the point of sale to the final consumer’.

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(2) The incentivising effects of the disposable packaging tax also do not contradict individual waste law provisions (cf. with a detailed list BVerwGE 179, 1 <14 ff. para. 39 ff.>). This follows from the mere fact that the aim pursued by the packaging tax in avoiding waste coincides with the objectives of the federal waste disposal legislation, and that a tax incentive to promote such conduct is not a measure that conflicts with the concept of federal law. In light of this, it is extremely unlikely that the measure conflicts with the individual provisions of waste disposal law.

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Accordingly, the requirement under § 33(1) first sentence of the [federal] Packaging Act (Verpackungsgesetz - VerpackG), which is directed at the last distributor of single-use plastic food packaging and beverage cups and directs them to also offer reusable packaging for goods served in disposable packaging at the place where they are put into circulation, does not preclude a further conversion to a reusable system in which, in order to avoid tax, the use of single-use packaging made from other materials or single-use dishware and cutlery is also ended. Both laws involve the same goal of encouraging the broadest possible use of reusable materials (cf. BVerwGE 179, 1 <16 para. 42>). Thus, it is obvious that a requirement for the continued use of single-use packaging, so long as it is not plastic, cannot be derived from § 33(1) first sentence of the Packaging Act. The same applies with regard to the obligation under waste disposal law for (financial) participation in a collective system for universal return of single-use packaging (‘dual system’) with the goal of reusing the material or recycling it to the greatest extent possible (§ 7(1) and (2) Packaging Act). This participatory obligation obviously does not prohibit retailers within the meaning of § 2 of the Packaging Tax Bylaws from either switching to a reusable system or from accepting returns of used single-use items and recycling them outside of the public waste disposal system (cf. BVerwGE 179, 1 <16 f. para. 44 ff.). It is equally apparent that the obligation of producers of specific single-use plastic products to pay into the Fund to Address the Negative Impacts of Single-Use Plastics (§ 12 of the Act; see para. 47 above) also does not prohibit the aforementioned actions to avoid the imposition of the tax.

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b) Nor is the disposable packaging tax precluded by the levy on single-use plastics under § 12 of the Act (see para. 47 above) in light of the principle of loyalty within the federal order in its manifestation as a limitation on the exercise of legislative competences (cf. also BVerfGE 106, 225 <243>; 160, 1 <26 para. 73>; 161, 1 <50 f. para. 116>).

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aa) Pursuant to the principle of federalism under Art. 20(1) of the Basic Law, the Federation and the Länder have a mutual duty to engage in federalism-friendly conduct, in the form of a limitation on the exercise of competences, by taking the required reasonable consideration with regard to the overall interest of the federal state when exercising their respective legislative competences. This obligation also comes into effect when Länder – as in this case – confer the competence to impose local consumption and expenditure taxes under Art. 105(2a) first sentence of the Basic Law on municipalities through Land law (cf. BVerfGE 161, 1 <50 para. 116>; [...]). The principle of loyalty within the federal order is only violated in cases of obvious abuse of the right to enact legislation (cf. BVerfGE 106, 225 <243>; 160, 1 <26 para. 73>; 161, 1 <50 f. para. 116>).

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bb) Based on the foregoing, the principle of loyalty within the federal order does not preclude the exercise of legislative competence under Art. 105(2a) first sentence of the Basic Law to establish a local consumption tax in the form of a disposable packaging tax. This also applies insofar as federal law under § 12 of the Act provides for a levy on single-use plastic products. It is not necessary to determine whether, in view of the requirement under constitutional law governing public finances that state functions must be primarily financed through taxes (see para. 44 above), a non-tax levy such as the one imposed on single-use plastics violates the principle of loyalty within the federal order if it impairs the exercise of taxation powers. This is because the disposable packaging tax does not deprive the Fund to Address the Negative Impacts of Single-Use Plastics (cf. §§ 4 ff. of the Act) of its financial basis. The Fund to Address the Negative Impacts of Single-Use Plastics and the disposable packaging tax are not linked to the same taxable source (cf. BVerfGE 161, 1 <42 para. 93> as to what constitutes equivalence). The disposable packaging tax is imposed on retailers of food and beverages (§ 2 Packaging Tax Bylaws), while the levy for the Fund to Address the Negative Impacts of Single-Use Plastics is directed at producers (§ 3 no. 3(a) of the Act) of single-use plastics pursuant to § 12 of the Act. Moreover, the single-use plastics levy also applies to products that are not subject to the disposable packaging tax, such as wet wipes, balloons or tobacco products. Further, the objective of the disposable packaging tax, which is to encourage retailers to switch to reusable products or accept returns of single-use products outside the public system in order to avoid imposition of the tax, does not impair the goal of the Fund to Address the Negative Impacts of Single-Use Plastics to finance measures to remedy the negative effects of single-use plastics on the environment, particularly the marine environment, and human health (§ 1 of the Act). This is because to the extent that such remedial measures are rendered unnecessary due to retailers of food and beverages taking the actions encouraged by the tax, there is no need to finance such measures.

III.    

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There are no indications that the disposable packaging tax in the city of Tübingen, which is suitable and necessary to generate revenue, results in unreasonable impairments to occupational freedom protected by Art. 12(1) of the Basic Law (see 1. below). The retailers’ obligation to collect the tax is also proportionate (see 2. below).

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1. Art. 12(1) of the Basic Law is violated when a tax, as a result of its structure and amount, has a regulatory effect on occupations (see para. 27 f. above) that makes it practically impossible for the business affected to make its chosen occupation the basis, either in whole or in part, for its livelihood or commercial activity (cf. BVerfGE 13, 181 <186 f.>, 31, 8 <23, 29>; 38, 61 <85 f.>; 135, 126 <143 para. 49>). This is only the case when the danger to the existence of the business is a direct result of the burden imposed by the tax and not due to other causes such as an unprofitable running of the business or failure to adopt alternative measures. Thus, the decisive factor is whether a business with average profits in the same industry or a similarly affected group cannot realise a reasonable profit after deduction of the expenses associated with the tax (cf. BVerfGE 16, 147 <165 ff.>; 31, 8 <27 ff.>; 38, 61 <85 f.>; 123, 1 <36>; cf. also BVerwGE 153, 116 <120 f. para. 16 f.>).

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b) Based on the foregoing, the disposable packaging tax of the city of Tübingen is not objectionable.

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aa) The Federal Administrative Court found that there is no evidence that the effects of the disposable packaging tax have resulted in the closure of affected businesses with average profits in the city of Tübingen (cf. BVerwGE 179, 1 <20 para. 56>). This was not disputed by the complainant. Likewise, no evidence was submitted in the constitutional complaint proceedings that there was an increase in the closure of affected businesses following the entry into force of the Packaging Tax Bylaws.

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bb) Given the foregoing, it is not necessary to determine whether there are identifiable subgroups of businesses among the retailers of food and beverages within the scope of the Packaging Tax Bylaws that are especially affected by the disposable packaging tax, such as operators of small kiosks, because they can neither pass on the cost of the tax – which is not insignificant pursuant to § 4(1) of the Packaging Tax Bylaws – to their price-sensitive customers, nor can they, as a result of their business structure, switch to a reusable packaging system or accept returns of single-use items and recycle them in order to avoid the tax. Nor is it necessary to determine how the disposable packaging tax affects businesses with average profits among such subgroups. In regard to the complainant, there are no indications that the continued operations of a comparable restaurant business with average profits are rendered economically unviable solely due to the disposable packaging tax. The complainant contends that the tax burden imposed is ruinous because it exceeds the amount of revenues and because, in the specific market segment of low-price food and beverages, the tax cannot be passed on in the form of higher prices to customers with lower incomes. However, it is not ascertainable why it should not be possible for a restaurant of the type operated by the complainant to avoid a tax that jeopardises its existence by switching to a reusable system or by accepting returns of the single-use items and recycling them outside the public waste disposal system (§ 3 no. 1 Packaging Tax Bylaws). Moreover, the complainant has not provided any information as to whether the McDonald’s restaurant it sold on 1 April 2024 will continue to operate as such. Given the complainant’s argument that the disposable packaging tax renders the further operation of the business impossible, this would have been relevant information.

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2. The interference with retailers’ occupational freedom resulting from the fact that retailers must collect the tax pursuant to §§ 2, 5 of the Packaging Tax Bylaws (determination, reporting and payment of the tax liability) is also proportionate (cf. BVerfGE 161, 1 <61 ff. para. 147 ff.>). This requirement is a suitable and necessary means to be able to collect the packaging tax. The less restrictive alternative of basing liability for the tax directly on the consumption of single-use products by consumers, rather than indirectly basing it on their sale, would not be feasible and is therefore not an equally suitable means to achieve the aims pursued (cf. BVerfGE 161, 1 <62 para. 150>). Due to the lack of practicability of other alternatives, the greater effectiveness of an indirect tax obligation that applies when single-use items are provided is not disproportionate to the associated administrative burdens imposed on the retailers (cf. also BVerfGE 163, 107 <158 para. 135>).