In Germany, alcohol may generally only be produced in distilleries that are sealed by the customs authorities (sealed distilleries). One exception to this principle is in the case of settlement distilleries.

These distilleries are not sealed and the alcohol tax is estimated on a flat-rate basis according to the type and quantity of raw materials processed. The permit entitles you to operate such a distillery. You are allowed to produce up to 300 liters of pure alcohol per calendar year (annual quota) in your settlement distillery.

Before granting a permit, the tax authorities generally check whether certain requirements are met with regard to your tax reliability, your bookkeeping and the operating facilities. You must also prove that you have an economic need, for example because you grow a lot of fruit as an agricultural business.

The permit is tied to your person and can be limited in time. Irrespective of the operating permit, you must also obtain approval for each individual distillation process and submit a so-called settlement declaration. The information in the settlement declaration is used to determine the quantity of alcohol you produce per distillation. Your annual quota will be debited accordingly.

If you do not have your own severance distillery, you can process your self-produced raw materials fruit (including fruit must and fruit pomace), berries, wine (including wine yeast and wine pomace), roots, Jerusalem artichokes or the respective residues thereof into alcohol as a so-called substance owner in a severance distillery approved by the customs administration or have them processed by the owner of the respective severance distillery (substance owner distillation).

You do not need a formal permit to act as a substance owner. However, you must register each individual distillation process with the main customs office. To do this, you submit a "substance owner's settlement declaration". The declaration also serves as a tax return for the alcohol tax. As a substance owner, you have a quota of up to 50 liters of pure alcohol per calendar year.