REPORT Sector inquiry into passing on of VAT exemption on sanitary products and contraceptives (available in German)
The AFCA questioned eight large retail groups, i.e. SPAR, REWE, HOFER, Lidl, dm, Müller, MPREIS and Norma, in detail about their prices and purchasing conditions for selected products in the categories of tampons, panty liners, sanitary towels and condoms for the sector inquiry. The analysis included more than 200 individual products and covered both the price developments around the 2025/2026 turn of the year as well as a longer observation period lasting from September 2025 to March 2026.
To this end, both product and price data were collated in order to verify whether the VAT reduction was indeed being passed on to consumers. At the same time, the AFCA was able to follow the price developments before and after the tax change and look into possible changes relating to discounts. The collated purchase and cost prices could also be used to analyse any changed margins for the products concerned. The AFCA not only checked the relevant calculations but also extensively examined numerous other factors that determine prices, including their development over time.
Key results and mechanics of the sector inquiry
“Our main priority was to deliver an overall picture of the situation. We did not wish to merely compare figures but wanted to determine the actual benefit for consumers,” explains Natalie Harsdorf, Director General of the AFCA.
The sector inquiry showed that overall the VAT exemption for sanitary products and barrier contraceptives has been passed on to consumers in full. On average, it was passed on in full over the whole observation period, but only at a level of 73% in the beginning.
Any deviations noted were mostly due to operational implementation issues and not to systematic breaches. However, it is worth pointing out that the AFCA found that some retailers have changed their discount policies. The development of these discount policies varied across individual companies. Some of them cut down on their discount campaigns or implemented fewer of them after the VAT change had been introduced. This is why, for some product groups (particularly panty liners and condoms), the actual savings for consumers were lower than could have been expected based solely on the VAT relief being passed on. The AFCA will continue to monitor this factor in order to be able to assess on a long-term basis how the reduction is being passed on to consumers.
Viewed over the entire investigation period, all companies offered these products at significantly lower prices. Five companies did not immediately apply the price reductions when the tax exemption entered into force on 1 January 2026, which, as the AFCA found, was mainly due to operational issues with implementation. These issues included short-term implementation requirements, the responsible employees being on leave due to the festive period, as well as technical or commercial errors. According to the companies, they remedied all of these delays within a few days.
Apart from the above, the inquiry did not find any other evidence of the tax relief not being passed on, either systematically or nationwide. In fact, an analysis of the trade margins showed that they had fallen in most companies, in line with the tax relief being passed on in practice.
Sector inquiries into tax reductions – Suspicious cases forwarded to competent district administration authorities
The AFCA conducted this sector inquiry to examine whether the tax reduction has been passed on across the country. Individual breaches of the Price Act, however, are prosecuted by the competent district administration authorities. Some 20 reports and complaints were forwarded to the district administration authorities to support their control activity in accordance with the Price Act.
Recommendations
The AFCA has consistently looked into complaints, which has contributed significantly to the statutory provisions being successfully implemented. The investigations have also shown that sector inquiries on tax reductions, as well as fulfilling a control function, also have a preventive effect, promoting market behaviour that meets the required standards.
The AFCA therefore wishes to put forward the following recommendations for any future tax relief measures:
1. Product groups concerned should be defined as clearly and precisely as possible
2. Any legal changes should be communicated in good time.
This reduces uncertainty about implementation and makes it easier for any tax relief to be passed on to consumers quickly and in full.