Austria food VAT reduction yields lower savings than expected

An analysis by OGM suggests that the VAT reduction on basic foodstuffs implemented in July may result in significantly lower savings for households than originally anticipated. Based on an evaluation of 2,009 actual receipts from 868 individuals, the study found that only about 23 percent of net expenditures were on tax-advantaged products.

According to OGM calculations based on Statistics Austria consumer data, the average household is expected to save approximately 57 euros per year. This is considerably lower than the initial government expectation of up to 100 euros annually. Experts attribute this discrepancy to complex exemption rules; for instance, while wheat flour qualifies for the reduced 4.9 percent rate, rye flour does not, and certain breads and pastries are only partially covered depending on their fat or sugar content.