Belgian government proposes 0%, 9%, 22% VAT model, predicts higher grocery bills

The Belgian federal government is considering a new VAT model that would set rates at 0%, 9%, and 22%. While basic food items would become cheaper under the 0% rate, the average supermarket shopper’s total bill is still expected to increase.

Under the proposal, basic food items would be taxed at 0%. Products currently taxed at 6% or 12% would shift to a 9% VAT rate. All other goods and services would be subject to the new standard rate of 22%. The government states the overhaul aims to generate billions of euros in extra budgetary flexibility. Negotiations over the VAT reform are still ongoing and have not been finalized. The reform is described as a comprehensive overhaul of Belgium's VAT system. While basic food items would become cheaper, snacks and other discretionary goods are expected to become more expensive. For the average supermarket shopper, the overall grocery bill is projected to increase despite lower prices on staples. The VAT reform remains a proposal and has not yet been enacted into law. No date has been set for when the new rates might take effect. The De Wever government cites budgetary needs as the primary motivation for the VAT overhaul. Retailers could see shifting demand as basic foods become cheaper and snacks more expensive. Consumers may alter their shopping baskets in response to the changing price incentives.

What we know

• The Belgian federal government is considering a new VAT model with rates of 0%, 9%, and 22%.

• Basic food items would become cheaper, but for the average supermarket shopper, the total bill is still likely to rise.

• The Belgian federal government is exploring a comprehensive overhaul of the VAT system: 0% on basic food items, 9% on a broad range of products currently taxed at 6% or 12%, and 22% as the new standard rate.

• The reform is part of the De Wever government’s effort to secure billions in additional budgetary flexibility, but negotiations are still in full swing.