While Sweden plans to cut its food tax in half to ease food prices, Denmark remains bound by outdated IT systems that prevent similar relief for Danish consumers. While most other European countries handle different VAT rates across product categories, Denmark handles a flat rate, which means that all goods, including Danish Food VAT, are taxed at the same rate of 25%
Sweden Moves to Cut Food VAT in Half, Danish Food VAT Remains
Food prices have surged across Europe, and governments are looking for ways to soften the financial blow on households. In Sweden, authorities have announced plans to halve the value-added tax (VAT) on food from its current 12 percent to 6 percent, starting April 1, 2026. The temporary reduction will remain in place through the end of 2027.
Swedish officials estimate this could save a household of two adults and two children around 4,400 Danish kroner (approximately $630) per year. The move is aimed directly at improving consumer purchasing power in the wake of persistent inflation and soaring grocery costs.
Pressure Mounts in Denmark, But No Immediate Change
The Swedish initiative has sparked renewed debate in Denmark, where food and non-alcoholic beverage VAT remains at a flat 25 percent, the highest in the European Union. Unlike most EU countries, Denmark does not apply differentiated VAT rates, meaning all goods, regardless of necessity or social impact, are taxed at the same rate.
Several Danish political parties, along with the nation’s largest trade union, 3F, have repeatedly called for lower food VAT to reduce everyday costs. However, the Danish government has opted for different economic tools to provide relief.
Technical Hurdles Prevent Change in Danish Food VAT
One of the primary obstacles to reducing VAT on select goods in Denmark is the nation’s outdated tax infrastructure. According to the Danish Ministry of Taxation, the current VAT system is not designed to support multiple tax rates across product categories.
Modernizing the system would take significant time and resources. Officials say that even under optimal conditions, implementing differentiated rates would not be feasible before 2028. For that timeline to be met, enabling legislation would still need to be passed by late 2026.
Alternative Measures Already in Motion
Because of the long timeline and complexity of overhauling the VAT system, the Danish government has opted to focus on more immediate solutions to ease household expenses. These include plans to eliminate taxes on items like chocolate, candy, and coffee as part of the national budget proposal.
The government also aims to nearly eliminate the electricity tax starting next year, a policy expected to yield immediate savings for consumers across the country. These initiatives are intended to provide short-term relief instead of waiting years for a new VAT infrastructure.
Finance and Political Outlook
The Danish Ministry of Taxation projects that VAT revenue from food and non-alcoholic beverages alone will amount to around 30 billion kroner ($4.3 billion) in 2025. This significant figure indicates the budgetary impact any VAT reduction on food would likely have.
Still, the government has signaled that the concept of differentiated VAT rates is being seriously evaluated. A task force within the Ministry of Taxation is currently assessing what legal and technical frameworks would be required for implementation in the future.
Looking Ahead
Although the timing remains uncertain, there is growing political interest in reassessing Denmark’s approach to VAT on essential goods. Proponents argue that reducing Danish food VAT would benefit low- and middle-income households most and align Denmark with taxation standards in other EU countries.
Until Denmark is able to update its tax system, its citizens will continue to face one of the highest food VAT rates in Europe, even as neighbors like Sweden move ahead with targeted tax relief. The Danish government remains committed to offering alternative forms of economic support while exploring long-term reform possibilities.
