Austria Introduces a New 4.9% Reduced VAT Rate for Essential Foodstuffs

Amendment to the Austrian VAT Act (UStG 1994)

The Austrian National Council (Nationalrat) has adopted a Bundesgesetz amending the Umsatzsteuergesetz 1994 (UStG 1994), introducing a new reduced VAT rate of 4.9% for a defined list of essential food products. The measure is intended to ease cost pressures on basic necessities and will apply from 1 July 2026.

Key Change: New Reduced VAT Rate of 4.9%

A new § 10(1a) UStG 1994 is introduced, providing that VAT is reduced to 4.9% for the supply and importation of certain essential goods, listed exhaustively in a newly added Annex 3 to the Act.

The reduced rate applies only if the supplies or imports consist exclusively of goods that fall entirely within the specified Combined Nomenclature (CN) positions or sub‑positions. Mixed or composite products falling outside the exact CN classification are excluded.

Interaction with Existing Reduced Rates

To ensure a clear hierarchy of VAT rates, the amendment restructures § 10 UStG as follows:

• The 4.9% rate takes priority where applicable (§ 10(1a)).
• The 10% reduced rate under § 10(2) applies only if the 4.9% rate does not apply.
• The 13% reduced rate under § 10(3) applies only if neither the 4.9% nor the 10% rate applies.
• References throughout the Act (including § 26a on flat‑rate taxation) are updated to include the new § 10(1a).

Scope of Goods Covered (Annex 3)

The new Annex 3 lists the goods subject to the 4.9% VAT rate, defined strictly by CN codes. The covered products are:

• Milk, including lactose‑free milk
• Yoghurt
• Butter
• Fresh hen eggs
• Fresh or chilled vegetables (with specific exclusions)
• Frozen vegetables
• Edible fruits (selected positions)
• Rice
• Wheat flour and wheat semolina
• Unprepared pasta (not cooked, filled, or otherwise prepared)
• Bread
• Table salt

The reliance on CN classifications means that customs and product classification accuracy will be critical for correct VAT treatment.

Source gv.at

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