Austria Moves Forward with the VAT Cut on Essential Food from July 2026

Austria is moving forward with a VAT reduction on selected basic food products to help households cope with high grocery prices.

From July 1, 2026, the VAT rate on certain essential foods is expected to fall from 10% to 4.9%. The Austrian Parliament lower house already passed a draft bill on May 21, 2026, and it is expected to be approved without major changes.

The reduced rate will apply only to a defined list of staple products, including milk, yogurt, butter, eggs, vegetables, fruit, rice, flour, semolina, pasta, bread, and salt.

The aim is to provide direct price relief for consumers and support domestic retailers. The government also links the measure to its wider goal of reducing inflation and improving Austria’s economic competitiveness.

To finance the VAT cut, Austria plans to introduce countermeasures, including a non-recyclable plastics tax and fees on parcels imported from third countries.