Distilling rights in Germany

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After hearing a lot about fruit brandies and their origins over the last few weeks, we would like to finish by devoting ourselves to the distilling rights. The question of what you have to do to be able to distill a good drop yourself keeps coming up. One thing should be said: It's not easy, because before you can even get a drop of homemade distiller, the committed distiller first has to fight his way through the German bureaucratic jungle. It not only has to be considered where it is allowed to be distilled, whether in your own 4 walls or rather at a registered distillery, but there are also laws about who you can then pass on and sell the good schnapps to. Many hobby distillers only want to burn for their own use or give away to friends. But what if home production is to be expanded and the idea of making a living from the fine fruit distillates comes up?

In order to get an overview of the possibilities and the legal situation, we would like to shed some light in the following.

First of all, we should take a close look at the various terms and types of distilleries. Roughly, a distinction is made between agricultural and commercial distilleries. Agricultural operations are those that also own land and have received burning rights for this reason. Commercial distilleries differ from agricultural distilleries in that they process raw materials that go beyond a normal agricultural operation. Furthermore, the distilleries are divided into compensation distilleries and closed distilleries in the legal text. Compensation distilleries means that the alcohol produced is calculated in advance using official yield rates. The so-called "tax-free excess yield" is usually retained by the severance pay burner. The maximum amount of 300 liters of pure alcohol may not be exceeded in the severance distillery. Distilleries and companies that fall under this law are small and fruit distilleries and also the "substance owners" themselves.

What are small and fruit distilleries?

These distilleries are defined as agricultural ancillary operations, which are mainly located in Baden-Württemberg, Saarland, Rhineland-Palatinate and Bavaria. The reason for the geographical limitation arises from history, since in the federal states mentioned, farmers mainly grew fruit and therefore also needed the distilling licenses in order to be able to use the fruit further. Small and fruit distilleries, in which mainly fruit from meadow orchards is distilled, have existed since the 18th century and are still in operation today. By continuing this tradition, the farmers and distillers make it possible to preserve the ancient cultural landscape in southern Germany and to promote the protection of old fruit varieties.

Who are fabric owners?

This is what people are called who do not own a distillery themselves and who have up to 50 l of pure alcohol produced in a severance distillery every year. The fruit that is distilled must be produced by the fabric owner himself. For the substance owner, this means that he must also be the owner or at least the tenant of the land on which the fruit is grown. No fruit that has been purchased, given away at auction or collected may be distilled. The only exception are wild forest berries, which may be collected and distilled. The operators of a severance pay distillery are not allowed to distil fruit whose origin is uncertain.

What tax is payable?

First of all, every small and fruit distillery has to pay 3/4 of the raw fruit alcohol obtained to the federal monopoly administration for spirits, for which the distillery receives an appropriate takeover fee in return. (However, the spirits monopoly is to be abolished by the end of 2017, which means that it will no longer be possible to sell pure alcohol to the federal monopoly administration.) The rest is processed by the manufacturers themselves into fine fruit brandies, spirits or liqueurs. A reduced brandy wine tax of 10.22 euros per liter of pure alcohol must be paid for this. We're talking about reduced brandy tax here, since the normal tax rate is usually 13.03 euros per liter of pure alcohol. When selling the distillates to end consumers or dealers, additional sales tax must of course be paid.

Contract burning:

Contract distilling is intended for cases in which the raw material owner has his own distillery but is not a registered severance pay distillery. This law of "simplified contract distilling" was enacted in order to avoid transporting the mash in cases where the substance owner himself has a working distillery. However, it is also a prerequisite that both companies are located in the same main customs office district. In this case, the substance owner is responsible for paying the tax. The latter must fill out the severance pay declaration in his own name and pay the tax.

Section Burning:

The fruit section distilling law stipulates that a total of 3000 liters of alcohol may be distilled in a section period of 10 years (300 liters of alcohol per year). It does not matter in which period within the 10 years the quota is exhausted. However, the quota expires immediately if purchased must, wine or Jerusalem artichoke are distilled or if the quota is exceeded.

The closed distillery:

As the name suggests, these are distilleries locked by customs. Here, in contrast to the severance distillery, the exact amount of alcohol is determined by a calibrated counter or a sealed collection vessel. Furthermore, the entire distillery is closed by customs, i.e. sealed, so that it can be determined exactly how much pure alcohol was produced. The tax-free surplus does not apply here, because if the producer wants to remove alcohol, this must be reported to customs. Customs determines the exact amount of pure alcohol removed, for which the normal tax rate must then be paid.

After we got an overview of the different distilleries, the question remains:

How do I get a burn right?

The decisive factor for obtaining a burning right is that a certain area is available for cultivation, the area must be 1/4 of the livelihood. In the case of orchards, for example, it must be approx. 5500 m2, in the case of meadows and arable land you need between approx. 5000 m2 and approx. 15 000 m2, depending on the yield per hectare of the raw material, in order to obtain a burning right. The exact size of the business required can be obtained from the relevant association at any time and is highly recommended before leasing or purchasing. In addition to the operation, the future distiller must demonstrate an economic need in order to obtain a new distilling license. An economic need is given if he can produce non-marketable fruit sufficient for the production of 300 liters of alcohol. As you can see, it is not easy to obtain a new distilling license and it can result in a number of administrative procedures and disappointments. As I said, as a fabric owner, you only have to have your own fruit in order to have it distilled into fruit brandy in a severance payment distillery nearby.

Another way to obtain a distilling license is to transfer a compensation distillery with an alcohol quota of 50 l or 300 l. However, this is only possible in limited areas in Baden-Württemberg, Saarland, parts of southern Hesse, Rhineland-Palatinate and Bavaria. In order to be able to transfer a distilling right, it must be ensured that, in addition to the minimum required cultivation area, the management center, i.e. the farm, is also handed over. In this case, handing over does not necessarily mean the purchase, it is sufficient if a lease or usufruct is agreed.

On the Internet you can always find online portals that sell small stills for private use. But caution is also required here, because the legislation expressly prohibits private burning. Even the offering of stills that are intended for non-commercial use is prohibited. Mere possession is permitted. Excluded from this ban are small stills with a capacity of no more than 0.5 liters that are used exclusively for private purposes. Whereby the legislator sees the use for demonstration or decorative purposes. Any commercial use, including rental, is expressly prohibited.

If a device is purchased for decorative purposes with a volume of more than 0.5 liters, this must be reported to the main customs office immediately to ensure that no brandy is produced.

Retailers are also prohibited by law from offering brandies from distilleries with a boiler volume of less than 5 liters, which is why many high-quality brandies from small operations cannot be marketed. So it's always worth trying the regional brandies in restaurants, because they're often only available in a small part of the region!

Anyone who would like to have a deep insight into the legal situation relating to the production of brandies in Germany can deal with the topic in detail on the customs homepage.

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