Sweden to investigate tiered VAT rates on food

The Swedish government will launch an inquiry into introducing different VAT rates on food to reduce household costs for essential groceries, according to a statement released Monday.

Finance Minister Elisabeth Svantesson said the goal is to lower expenses for “particularly necessary food items” that many working Swedes purchase weekly. The current reduced food VAT rate of 6%—down from 12%—is temporary and expires on 31 December 2027.

The inquiry will include defining food categories to apply varying VAT rates. However, industry group Livsmedelsföretagen criticized the plan, with press chief Daniel Emilsson calling it “cumbersome and fundamentally arbitrary” to determine which foods qualify as essential.

Emilsson argued that necessity varies by household and that the state should not define it. He also disputed the government’s claim that a larger share of income now goes to food, stating that despite price increases in 2022–2024, the proportion of disposable income spent on food has not risen in 30 years.

Daniel Waldenström, professor of economics, said broad VAT cuts benefit many but warned that differentiated rates risk complicating the tax system. “The less differentiation, the better for the overall economy,” he said, citing research.

SVT Nyheter sought comment from Svantesson but received no response.