Brief information: VAT on staple foods reduced

At the end of January, the Council of Ministers decided to reduce VAT on selected staple foods to 4.9 % with effect from 1 July 2026. The list of foods eligible for the reduced rate had long been the subject of discussion and speculation. According to the government, the reduced rate of 4.9 % (instead of 10 %) applies to a selection of staple foods that are regularly purchased by everyone. Specifically, these include bread, fresh eggs, butter, flour, table salt, milk, yoghurt, rice, pasta, pastries, tomatoes, gherkins, peppers, lettuce, carrots, celeriac, pumpkin, spinach, beans, peas, apples, pears, plums and apricots. In addition to meat and sausages, which are missing for budgetary reasons, strawberries and other berries are also not included on the list.

Furthermore, fair prices are to be ensured through stricter measures (e.g. by combating unfair business practices) and the regulatory framework for purchasing and sales cooperatives is to be reformed. In the energy sector, in line with the Ministerial Council's report on combating inflation and strengthening the economic location, a package of measures is planned to ensure adequate fuel prices. Furthermore, industrial electricity hedging is planned from 2026 to 2029 (to ensure planning security for industrial companies) and the abolition of the legal ban on carbon capture and storage.

By the middle of the government’s term of office – depending on economic and budgetary developments – non-wage labour costs are to be reduced as a first step. Thereafter, a gradual reduction in the burden is to be implemented exclusively through the Family Burden Equalisation Fund (3.7 %).

We will keep you informed of further developments.

Image: © Adobe Stock - Sina Ettmer