Sweden has announced plans to cut its already low food VAT rate in half, highlighting Denmark’s comparatively high rate and renewing calls for reform from Danish retailers. While Danish food prices continue to rise, the Danish Grocers Association warns of the growing price gap between Denmark and Sweden, which risks undermining Danish business owners.
Sweden Lowers Food VAT, Putting Pressure on Denmark
The Swedish government recently unveiled a proposal to halve its food value-added tax (VAT), which is currently set at 12%. If enacted, this change would bring the food VAT down to 6%, making everyday groceries significantly cheaper for Swedish consumers. According to Swedish government estimates, a family of four stands to save approximately 6,500 SEK (roughly $600 USD) annually, while a retired couple could save about 4,400 SEK (around $400 USD).
This initiative is designed to ease economic pressure on households, particularly those with lower incomes who spend a higher proportion of their earnings on groceries. The policy is being widely viewed as a socially targeted economic boost, aiming to enhance purchasing power and reduce food insecurity.
High Danish Food Prices Sparks Domestic Debate
In sharp contrast, Denmark maintains its food VAT at 25%, the highest rate in the European Union. This discrepancy is fueling criticism from Danish retail and grocery trade groups, most notably De Samvirkende Købmænd (DSK), the Danish Grocers’ Association. DSK argues that the widening gap in food pricing between Sweden and Denmark risks undermining Danish consumers and local businesses.
In response to Sweden’s move, DSK is renewing its call for a Danish tax reform that would lower the food VAT from 25% to 15%. According to DSK’s calculations, such a reduction would cost the Danish treasury approximately 15 to 16 billion DKK per year. The organization proposes offsetting the loss by raising the VAT on non-food goods, such as electronics and bicycles, by 1.6 percentage points.
DSK sees their proposal as both financially viable and socially equitable. A survey conducted earlier in 2025 by Norstat found that 60% of Danes support a reduction in food VAT, even if it means slightly higher VAT on less frequently purchased items.
As Danish Food Prices Soar, Cross-Border Shopping Highlights the Problem
One of the growing consequences of Denmark’s high food VAT is the surge in cross-border shopping, particularly with neighboring Sweden. Danes are increasingly traveling across the Øresund Bridge or through other border points to purchase groceries at significantly lower prices than Danish food prices.
Based on 2024 figures, 36% of Danes reported having shopped for groceries in Sweden within the past year. DSK estimates that this cross-border trade amounts to a loss of up to 9 billion DKK ($1.3 billion USD) annually for Danish grocery retailers. A large share of that spending bypasses both the domestic retail sector and the Danish tax system, further underlining the financial strain high food VAT places on the national economy.
Additionally, analyses suggest that this grænsehandel costs the Danish government roughly 4 billion DKK each year in lost tax revenues, a figure that could be reduced with a more competitive VAT structure.
Call for Political Action
DSK argues that without a VAT reduction on food, Denmark risks growing regional inequality and continued erosion of its retail sector. The association sees a direct correlation between rising grænsehandel and Denmark’s rigid tax framework, making it more difficult for local businesses to compete with their Scandinavian counterparts.
Through stronger price competitiveness and more balanced tax policies, DSK believes Denmark could not only counter the deliberate incentive to shop across borders but also offer meaningful financial relief to consumers already burdened by inflation and energy costs.
As the Swedish reform plan gains momentum, pressure is mounting on Danish policymakers to take similar steps. The moment, DSK says, is ripe for a broader national discussion about tax fairness, retail sustainability, and long-term economic resilience in Denmark.
