What to Watch Out For

Tax on Many Food Items Cut in Half Effective Immediately

To save the expected 100 euros per year, consumers need to pay close attention to what they put in their shopping cart...(Bild: Malena Brenek)

Grocery shopping is getting cheaper: The average family is expected to save a good 100 euros a year because, as of July 1, the value-added tax on many food items will be cut in half to 4.9 percent. Retailers promise to pass on every cent of this savings. But consumers need to be careful—there are some rather odd restrictions.

The goal of lowering the value-added tax on many products from the standard rate of 10 percent to just 4.9 percent—effective immediately—is to save an average family around 100 euros. One thing is certain: This will cost the government 200 million euros this year alone, and twice as much next year. Mathematically speaking, we’ll be paying this amount less when we shop.

Of course, consumers can only fully benefit if they adjust their diets to include the reasonably short list of discounted food items. Items such as milk and some dairy products, as well as fresh chicken eggs, will become cheaper. In addition, there are many types of vegetables—even if they are frozen—mostly domestic fruit, bread and pastries, as well as regular table salt (see table below).

Depending on the supermarket chain, 4,000 to 16,000 items will be cheaper
Billa estimates that a total of around 4,000 items will be affected. Billa board member Erich Szuchy promises that the lower tax will be passed on to customers down to the last cent. In cases of non-round amounts, prices will be adjusted down to the nearest lower cent value in favor of consumers.

The organic Kaiser roll, for example, will now cost 0.42 euros instead of 0.45 euros—the exact price would be 0.429. Spar had to adjust nearly 16,000 items across its various brands. The cheapest liter of milk from S-Budget now costs seven cents less, and the store-brand roll costs two cents less.

“Healthier” and basic foods are intended to become more affordable.(Bild: Krone KREATIV/stock.adobe.com)

However, smaller retailers and food suppliers in particular are groaning under the burden of this regulation, which is highly complex in its details. Bakers, for example, criticize the fact that the tax break applies only to baked goods with a maximum of five percent fat or sugar content in the dry matter.

“Luxury rolls” and other
The result: If the dough contains additives such as nuts, sunflower seeds, poppy seeds, whole eggs, raisins, or honey, the product will often not qualify and will continue to be taxed at ten percent. Furthermore, only wheat flour—not rye or spelt—is on the list. The fact that quince, a fruit rarely purchased, is considered a staple food and receives preferential treatment is also not obvious to everyone.

And anyone who buys a roll plus butter pays 4.9 percent for each. But if you have the butter spread on the roll right there at the counter, the tax remains at ten percent. The same applies if you want to eat the roll and butter right there in the store and have them served to you at a snack table. So consumers need to be careful.