Temporary VAT Reduction on Food in Sweden

Sweden has proposed a temporary reduction in the VAT rate applied to food. If approved, this change will lower the current VAT rate from 12% to 6% on most foodstuffs for a limited period between 1 April 2026 and 31 December 2027.

This measure is part of a broader effort to support household finances during a period of economic downturn and persistently high food prices. The Swedish government expects the VAT cut to translate into immediate and almost full price reductions, benefitting consumers across all income levels.

The proposal takes a step forward by materializing in the proposed bill Prop. 2025/26:55. According to the official announce, the measure expects to lower the food basket for a family with children by 6,500 kronor cheaper per year. Take a look at the latest official announce.

Legal and Practical Scope of VAT Reduction on Food in Sweden

The amendment to the VAT Act (2023:200) specifies that:

• The 6% VAT rate will apply to most food products, as defined in Article 2 of the EU’s Food Regulation.
• Exceptions include alcoholic beverages and tap water, which remain subject to the standard or other reduced rates.
• Bottled water will be taxed at the same reduced rate.

Retailers, suppliers, and food producers will need to adapt their accounting and pricing systems to accommodate the temporary VAT rate. Restaurants and catering businesses, which are subject to a different VAT rate (12%), will need to make a clear distinction between dine-in services and take-away food (the latter qualifying for the 6% rate).

Broader Implications

While the reduction is temporary, it highlights the role of VAT policy as a tool for economic relief. However, the government stresses the importance of evaluating the price impact and ensuring that the benefits are passed on to consumers, rather than absorbed by intermediaries in the supply chain.

The reform is expected to cost the Swedish treasury approximately SEK 37.2 billion over the 21-month period. Nevertheless, authorities believe the temporary measure is justified by the expected relief it will bring to households during challenging economic times.

Find here the official announcement.