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
Join our Linkedin Group on ”VAT Rates – Legislative changes”, click HERE
