Austria – Reduction in VAT on essential food from July 2026

Austria plans to halve the VAT rate on selected basic food from 10% to just under 5%, with the change scheduled to take effect in mid-2026. The exact list of products subject to this reduction is still being determined, however milk, eggs, bread products, and vegetables have been named as likely food items on which VAT will be reduced.

The measure is a response to inflation and the rising cost of living, aiming to provide permanent relief to households and ensure essential goods remain affordable.

The current standard VAT rate in Austria is 20%, with most food products already subject to a reduced rate of 10%. The proposed halving of this reduced rate is a significant economic policy step. The Austrian government’s decision was made during a retreat in mid-January 2026 and aims to address the inflation experienced by the public.