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VAT cuts as Europe food inflation eases to 4.2% Nov 2023

Nov 2023 Eurozone food inflation eases at 4.2% (5.0% September); temporary VAT subsidies for foods and other basics

In November 2023, Euro headline inflation stuck at 2.4% – October’s 3.1%.

This has prompted many countries to continue to roll over temporary VAT cuts first put in place at the heigh of the cost-of-living crisis.

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This comes despite IMF criticising inflation VAT cuts in a recent report, and has been joined by the OECD review of VAT reductions and other policy remedies.

  • Spain continues zero-rating on food into second half of 2024
  • Poland rolls over again energy and food temporary VAT cuts till 30 June 2024
  • Ireland extends VAT cut on energy till 2024
  • Italy rolls over again to December 2023 cut on gas VAT rate to 5%
  • Germany ends early gas VAT cut to 7%
  • Cyprus extends cuts to food VAT to zero until April 2024
  • Portugal extends zero-rate for foodstuffs till end 2023
  • Ireland to extends again to Oct 2023 VAT cut to restaurants, cafes and tourism on inflation worries
  • Netherlands proposed 0% VAT rate for food
  • Croatia to roll over energy VAT cut into 2024
  • Greece extends reduced VAT rate cut for fifth time
  • Lithuania cuts and rolls over various VAT cuts
  • Slovak Republic cuts VAT on restaurants and sports 2023
  • Estonia considers VAT cut to 5% for food and restaurants
  • Finland confirms VAT on electricity to 10% between December 2022 and April 2023; personal transport exempt for same period
  • Belgium makes energy cut to 6% permanent
  • Luxembourg cuts VAT from 17% to 16% from 2023
  • Latvia parliament reviews foods and heating rate cut to 5% for 3 years
  • Portugal cuts domestic electricity from 13% to 6%
  • Germany renews VAT cut on hospitality services into 2023
  • UK Prime Minister rivals ponder energy VAT cut to 0%
  • Slovenia confirms domestic gas VAT rate cut and digital newspapers in September
  • Bosnia approves VAT cut on basic foodstuffs
  • Italy considers food VAT rate cuts
  • Cyprus parliament votes to zero-rate VAT on petrol, energy and electricity
  • Bulgaria confirms energy VAT cut extension plus zero-rating basic foods
  • Estonia to temporarily cut VAT on domestic energy until May 2023
  • Ireland gas & electricity VAT cut to 9% for 6 months as inflation hits 40-year high
  • Portugal further duty cuts as wait confirmation on cut VAT on petrol to 13%
  • France Presidential candidates offer petrol and energy VAT cuts
  • Netherlands VAT cut on energy and duty reduction on petrol till Dec 2022
  • Spain has cut VAT on domestic fuel from 21% to 10% until 30 Jun 2022.
  • North Macedonia cuts VAT in basic foodstuffs (0%) and petrol (10%) from March 2022. Electricity rate cut till Jun 2023
  • Turkey to cut foodstuffs VAT from 8% to 1% and electricity to 8% as inflation escalates
  • Romania is reducing domestic electricity from 19% to 5% in 2022. It is also considering cutting foodstuffs VAT to 0%. A proposal to cut VAT on petrol is also being prepared for April 2022.
  • Greece is reviewing a VAT cut to electricity and basics
  • Czechia Ministry of Finance reduced to 0% VAT on domestic gas and electricity in breach of the VAT Directive and waived collections for Nov and Dec 2021. Full 21% rate now applies again in 2022.
  • Ukraine considering zero-rating from 20% of fuel in light of Russian invasion

The EU introduced new reduced EU VAT rate setting freedoms on 6th April 2022 which allows member states to use a reduced VAT rate below 5% for the first time on a controlled ranges of goods and services. Plus, extended the categories of supplies eligible for the other two reduced rates permitted below their standard rate. Energy VAT rates must however be at least 5%.

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