The Budget Accompanying Act 2025 (BBG 2025) introduces a landmark change to Austria’s VAT system by implementing a real VAT exemption for feminine hygiene products and contraceptives, effective January 1, 2026.
This allows for:
- A 0% VAT rate on qualifying products
- Full input VAT deduction for suppliers — meaning businesses can reclaim VAT on related costs
Scope of Products
The exemption applies to:
- Feminine hygiene products: tampons, pads, menstrual cups, panty liners, etc.
- Contraceptives:
- Chemical: spermicides
- Hormonal: birth control pills, patches, implants
- Mechanical: condoms, diaphragms, IUDs
Practical Implications
- ️ Retailers must apply a 0% VAT rate but still issue compliant invoices
- Input VAT on production, distribution, and marketing remains deductible
- Consumers benefit from lower prices, assuming full pass-through
- Accounting systems must be updated to reflect the new tax treatment
EU Context
Austria joins a small group of EU countries implementing true VAT exemptions for these products, going beyond reduced rates. This aligns with broader EU goals around gender equity, public health, and accessibility.
Source
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