Sweden cuts VAT on all food to 6% as Danish retailers voice concerns

Sweden has halved its value-added tax (VAT) on food from 12% to 6% starting Wednesday, a move that has raised alarm among Danish retailers, reports Danish broadcaster DR.

The reduced rate, which applies to all food and beverages—including coffee, beef, vegetables, and caviar—will remain in effect until at least December 2027. Swedish supermarkets have already begun adjusting prices, with some, like Willy’s in Malmö, reporting increased customer traffic after lowering prices ahead of the official change.

Jimmy Ericsson, store manager at Willy’s, said the supermarket had hired extra staff to update price tags and handle the transition. “We had a very busy day with many customers,” he noted, though he acknowledged that Easter promotions may also have contributed to the uptick.

In Denmark, where VAT on all goods stands at 25%, industry leaders warn the Swedish tax cut could drive more Danes across the border for groceries. Jannick Nytoft, CEO of De Samvirkende Købmænd (the Association of Danish Grocers), called Denmark’s food prices “among the highest in the world” and argued that lowering VAT was necessary to stay competitive.

“We already see Danes spending nine billion kroner annually on cross-border grocery shopping,” Nytoft said. “With Sweden’s VAT now one-fifth of Denmark’s, and Germany’s at just 7%, we fear even more will choose to shop abroad.”

Economists, however, caution against adopting a similar policy in Denmark. Marie Møller Kjeldsen, a senior analyst at Aarhus University’s Department of Economics, noted that Sweden’s differentiated VAT system makes such adjustments easier than in Denmark, where a uniform rate applies. Implementing a lower food VAT would require significant administrative changes, she said, imposing costs on both businesses and tax authorities.

Jakob Lave, director of food policy at Dansk Industri (Confederation of Danish Industry), echoed the concern, calling differentiated VAT “an expensive solution that doesn’t benefit consumers enough.” He warned that the shift could burden businesses already under financial strain.

Denmark’s government has already allocated six billion kroner annually from 2028 to either reduce food VAT or eliminate it entirely on fruits and vegetables, following a January agreement with multiple parties. Nytoft urged further action, suggesting Denmark start with zero VAT on produce before aligning its food tax rates with Sweden and Germany.

In February, Denmark’s parliament approved a tax-free “food voucher” to help over two million citizens offset rising grocery costs.