Austrian food VAT cut fully passed to shoppers, trade group claims

The Austrian government reduced the value‑added tax on basic food items from 10 % to 4.9 % on 1 July. The trade association representing retailers, led by Rainer Will, says the cut is being passed on to consumers in full. Data from Statistics Austria show food price inflation at 2.6 % in 2024, well below the overall inflation rate of 2.9 %, and the cheapest items have even fallen 5.5 % year‑on‑year. A recent Bundeswettbewerbsbehörde (BWB) report confirmed that the VAT reduction on feminine‑hygiene products was also fully transferred to shoppers, which the association cites to counter foodwatch’s accusations of profiteering.

Public reaction has been mixed. Many commentators label the measure a “populist gimmick” and argue that the promised €100‑per‑year saving is negligible given higher housing and energy costs. Others welcome any relief, however modest. The new rules are complex, relying on the Combined Nomenclature (KN) code and factors such as fat and sugar content, which has caused confusion for retailers and consumers alike. Items like plain bread, most milk sold for home use, fresh vegetables and certain fruits qualify for the reduced rate, while processed goods, high‑fat pastries, coffee drinks made with milk, and foods sold for on‑premise consumption remain taxed at the standard 10 %.

Foodwatch’s criticism of the VAT cut as a “price‑inflating” scheme was dismissed by the trade group as ideologically driven and not supported by the available price data.