Effective from January 1, 2026, Austria will abolish value-added tax (VAT) on specific sanitary products and contraceptives as part of the Budget Accompanying Act 2025. Previously, these items were subject to a reduced VAT rate of 10%.

The new regulation aims to alleviate the financial burden on consumers and improve access to essential health and hygiene products. Retailers will need to adjust their inventory management systems to reflect the zero-rated status of these products.

The Austrian Federal Competition Authority (AFCA) has the authority to initiate sector inquiries if there are indications that the tax reduction is not being passed on to consumers. This power is part of the AFCA's broader mandate to investigate potential restrictions or distortions in competition within specific business sectors.

Since 2024, the AFCA can conduct inquiries if there are signs that a tax reduction, such as the VAT exemption, is not being properly implemented, in accordance with the Competition Act and the Price Act.