Reduced VAT rate for basic food products comes into effect on July 1
From 1 July 2026 to 30 June 2027, a reduced VAT rate of 12% will apply to four basic food product groups – bread, milk, poultry meat and eggs – replacing the previous 21% rate.
To mitigate the impact of rising food prices on household welfare, especially for socially vulnerable groups, a reduced value-added tax (VAT) rate of 12% will be applied to certain staple food items from July 1 this year for one year. This is stipulated by amendments to the Value Added Tax Law, which came into force on January 1 this year. According to transitional provisions, the 12% VAT rate will be effective from July 1, 2026 to June 30, 2027.
The annotation to the draft law states that food prices in Latvia have increased significantly in recent years, mainly due to global price hikes, higher energy costs, rising transport expenses and geopolitical instability. High food prices mean that a large share of household budgets is spent on food, particularly for socially disadvantaged groups. Currently, most food products in Latvia are subject to the standard VAT rate of 21%, which negatively affects purchasing power.
Which products are covered?
The reduced 12% VAT rate will apply to four product groups:
- Bread – all types of bread, including pasteurised or frozen, and with permissible additives such as seeds, nuts, grains.
- Milk – cow, goat or sheep milk, including lactose-free milk, regardless of fat content.
- Poultry meat – fresh, chilled chicken, turkey, duck and goose meat, as well as poultry offal, including portioned, boned, cut and minced meat.
- Eggs – unprocessed poultry eggs.
The Consumer Rights Protection Centre (PTAC) explains that the reduced rate does not apply to frozen meat, sausages, dried products, pastries, cakes, pies, rusks, toast, breadcrumbs, UHT milk, condensed milk, flavoured milk, plant-based alternatives (oat, almond drinks), and minced meat with a salt content exceeding 1%.
Price calculator and consumer information
To help shoppers understand how the VAT reduction will affect final prices, PTAC has created a price comparison calculator. Users can select a product and enter the current price including 21% VAT, and the calculator will show the price with 12% VAT if the reduction is fully passed on. For example, if a litre of milk previously cost €1.50, applying the 12% rate would bring the price to €1.39, saving €0.11 per litre. It should be noted that a reduction of 9 percentage points in the VAT rate translates to approximately a 7.4% price decrease on the shelf, because the new price is calculated by applying the reduced rate to the price excluding tax, not by subtracting from the current final price.
PTAC has also created a special section on its website titled “Reduced 12% VAT rate for basic food products”, explaining which products are covered, exceptions, how the reduction affects the final price, what consumers should look for in stores, and where to address questions or complaints.