Austria has introduced a new 4.9% reduced VAT rate for specific essential food products under § 10(1a) UStG 1994, effective July 1, 2026, to lower consumer costs. The rate applies only to goods precisely matching defined CN codes, requiring businesses to ensure accurate product classification to avoid incorrect VAT treatment and compliance risks.
Austria Introduces a New 4.9% Reduced VAT Rate for Essential Food
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Austria
Author: Ivana Picajkić
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Fiscal subject related
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Content accuracy validation date:
18.03.2026
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Austria has adopted an amendment to the Austrian VAT Act (UStG 1994) introducing a new reduced VAT rate of 4.9% for a specific list of essential food products. The measure was approved by the Austrian National Council (Nationalrat) and will enter into force on July 1, 2026. The main goal is to reduce the cost of basic food items for consumers.
A new provision (§ 10(1a) UStG 1994) introduces a 4.9% VAT rate for the sale and import of certain essential goods. However, the reduced rate applies only to products explicitly listed in the new Annex 3 of the law.
The VAT rate applies only if the product fully matches the specific Combined Nomenclature (CN) classification codes defined in the Annex.
This means:
- If a product does not exactly fall under the specified CN code, the 4.9% rate cannot be applied.
- Mixed or composite products outside the exact classification are excluded.
The amendment also establishes a clear hierarchy of reduced VAT rates in Austria:
- 4.9% VAT rate – applies first if the product is listed in Annex 3 (§10(1a)).
- 10% VAT rate – applies only if the 4.9% rate does not apply (§10(2)).
- 13% VAT rate – applies only if neither the 4.9% nor the 10% rates apply (§10(3)).
The law also updates references in other provisions of the VAT Act (e.g., §26a flat-rate taxation) to include the new rate.
The Annex 3 list of essential foods includes:
- Milk (including lactose-free milk),
- Yoghurt,
- Butter,
- Fresh eggs,
- Fresh or chilled vegetables (with some exclusions),
- Frozen vegetables,
- Certain fruits,
- Rice,
- Wheat flour and wheat semolina,
- Unprepared pasta (not cooked or filled),
- Bread,
- Table salt.
The new VAT rate is strictly linked to CN product classification, meaning that:
- Correct product classification will be crucial for applying the correct VAT rate.
- Businesses must ensure their product master data and tax settings match the correct CN codes.
- Incorrect classification could lead to wrong VAT treatment and potential tax risks.
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