Tracking tampon tax: No EU27 nations leverage new feminine hygiene full VAT exemption

16 Feb 2023 --- An EU law introduced last April allows Member States to exempt value-added tax (VAT) on sanitary products. While there have been notable moves among countries to reduce the levy on goods such as tampons and menstruation pads, none of the EU27 nations have reached a decision to fully eliminate the tax.

PersonalCareInsights reached out to the finance departments of these nations to investigate how they are responding to the law and whether there are plans among nations to take advantage of the EU tax exemptions. Concerningly, we find that reducing VAT to such products may not result in lower costs. 

“Under the former rules, female sanitary products were already included in the list of goods to which a reduced rate as low as 5% could be applied,” an EU official previously told our publication.

Since the start of 2023, the updated VAT rules have gradually reduced feminine hygiene tax rates across the EU. For instance, in Croatia, the feminine hygiene product tax was reduced from 25% to 13%, in Italy from 10% to 5% and in Spain from 10% to 4%.

The EU Council Directive on these VAT amendments justifies these reduced rates as “strengthening the resilience of health systems.” However, it remains to be seen whether the bloc will eventually meet its historic ambition of tax harmonization, while its VAT rates for feminine hygiene products range from 4% in Spain, to 27% in Hungary, for instance.

The EU is behind the UK in tax reductions for female sanitary products, according to our investigation. The UK had a 5% tax on these items in 2000. In 2016 the authorities attempted to scrap the tax but had to wait until the end of Brexit’s transition period in January 2021 – to be free of the stricter EU VAT laws that were in place until April 2022.

“It’s never valid to capitalize from sexism, and this is exactly what countries are doing until they scrap the tampon tax. We’re often talking about small percentages to whole governments, but large amounts for consumers,” Laura Coryton, UK tampon tax campaigner and director of Sex Ed Matters, tells PersonalCareInsights.

Some nations think that VAT reduction may not reduce the final price of period products.VAT reduction may not reduce final price
Franja Zagorc, public relations officer at the Slovenian Ministry of Finance, explains why the nation is hesitant to lower the VAT rate for sanitary products further. Similar concerns are shared across EU nations.

“One of the reasons not to lower the VAT rate for sanitary products further, from 9.5% to 5%, was also discussed in 2021 at the meeting of the Slovenian National Assembly.” 

“Parliamentarians rejected the proposal for an additional VAT reduction on hygiene devices because it turns out that such reductions in VAT rates are poorly reflected in lower final prices for consumers, as the tax reduction can often be replaced by a higher pre-tax price set by suppliers of these products. This was also the case in 2021 when the VAT rate for sanitary products was reduced from 22% to 9.5%,” she flags.

She stresses: “For almost by default, the tax reduction was replaced by a higher pre-tax price.”

In January 2021, the UK abolished the “tampon tax” of 5% – with a zero rate applying to women’s sanitary products in an effort to “end period poverty,” according to the UK Treasury under the Boris Johnson administration. However, research from Tax Policy Associates finds that abolition of the tax “benefited retailers, not women.”

“An analysis of Office for National Statistics data [on tampons] by Tax Policy Associates demonstrates that the 5% VAT saving was not passed onto women. At least 80% of the saving was retained by retailers (and very possibly all of it),” shares the non-profit company.

Coryton adds: “UK’s tampon tax rate accounted for 0.0072% of annual revenue made from all VAT annually, but it amounted to £15 million (US$18 million) for consumers each year.” 

“A symptom of sexism”
Coryton expresses that the responsibility of end price lies not just with governments but with retailers as well. “Ending tampon tax is partly about money, but it’s also about ending a symptom of sexism and tackling the period taboo.”

“Furthermore, getting retailers to drop the price of their period products is a process. We are currently campaigning to achieve this. In that sense, our tampon tax campaign is not yet complete. One day, I know we will ensure all retailers drop their prices, and then our campaign can be considered complete,” she adds. 

“This shouldn’t put countries off ending the tampon tax. It’s just the next stage of the campaign once the tax has legally been scrapped. It’s clear scrapping this tax has a large financial benefit for society and a social one too, in that it ends a symptom of sexism.”The EU seeks to promote harmonized VAT rates.

Can sanitary products be an exception?
Responding to the question of whether Slovenia is planning or willing to adopt the total VAT exemption on sanitary products, Zagorc points to having to consider reducing VAT for other necessary items, such as medical supplies.

“When further lowering the VAT rate for hygiene products or any other products, it is appropriate to address a wider consideration of any changes in VAT rates,” she notes.

“As regards the proposals for further reductions in the taxation of sanitary products, there’s no doubt such classification would constitute a differentiation in the tax burden on similar goods and services, to which the same lower rate of 9.5% applies.” 

As an example, Zagorc points out that since the same VAT rate of hygiene products are levied on the supplies of medical equipment, devices and other means intended to alleviate or cure harm or disability, lowering the VAT on hygiene products would necessarily have to reflect on the VAT of these other items.

“Such devices also don’t constitute luxury goods but are needed by persons with a deteriorating medical condition and are necessary to manage a certain morbidity successfully,” she continues. 

“The same applies to supplies of medications and certain other supplies that are also intended to meet the basic living needs of final consumers – such as food, water and housing if they are part of social policy – to which a lower rate of 9.5% is applied, too.” 

Zagorc stresses the importance of considering the social, economic and fiscal effects of reduced VAT rates upon a national economy, next to looking at the issue from a broader EU-wide perspective.

Uncertainty from the Baltic region
Based on the arguments that Zagroc from Slovenia presented, she confirms that there are “currently no plans to reduce the VAT tax rate for female sanitary products.” 

“In Slovenia, sanitary products, tampons and some other menstrual hygiene products have been taxed less since May 2021 by being levied with the VAT rate of 9.5% rather than the general 22% rate. Some political parties, commentators, associations and NGOs, e.g., The Consumer Federation of Slovenia, have proposed a further reduction of the VAT rate for these products.”

On a similar note, Estonia, Latvia and Romania share that it has no interest in further reducing the VAT rate.

“Estonia’s standard rate of VAT is 20%, the reduced rate is 9% and that applies to sanitary products. We are currently not planning to reduce it any further,” a spokesperson for Estonia’s finance ministry tells PersonalCareInsights. 

“Our aim is a tax system that is simple and stable with as few exceptions as possible. International studies have also shown that the tax exceptions do not help to reduce the prices as much as the VAT decreases.” 

Additionally, a spokesperson at the ministry of finance in the Republic of Lithuania shares that there might be a possibility to follow the VAT reductions.

“It could be of interest that draft amendments to the VAT law proposing to apply a reduced VAT rate of 5% on sanitary products were put forward in the parliament on the initiative of the respective members and will be considered in due course.”The UK abolished the “tampon tax” of 5% – with a zero rate in January 2021.

“The program of the government of the Republic of Lithuania seeks for a revision of existing tax reliefs to shrink or abandon those that could distort the fairness of taxation or prove to be inefficient in tackling the foreseen objectives,” they continue.

Additionally, the spokesperson says that the new amendments to the VAT directive extended the scope of goods and services subject to reduced VAT rates. 

“Nevertheless, by determining national VAT incentives, each member state takes into consideration the state’s priorities and financial capabilities, measures assumed obligations and other possible consequences.

Currents in the Mediterranean region
In southern Europe, Italy reduced the VAT rate on pads and tampons to 5% in January this year. 

Similarly, Spain has taken steps in line with EU law.

“The government has reduced the VAT of hygiene products for females from 10 to 4%. This action was carried out in September 2022, and was a political promise from the parties of the Cabinet of president Pedro Sánchez,” says a spokesperson for the Spanish treasury ministry.

No plans from Central Europe
The Netherlands and Germany – who have already implemented a reduced tax rate – have expressed no commitments to trimming the levy further.

“The Netherlands currently applies a reduced VAT rate to internal and external feminine pads/tampons, menstrual underwear and the so-called menstrual cup,” says Fabian Paardekooper, spokesman of the state secretary Marnix van Rij.

“Introducing a zero rate on sanitary products is, at this moment, not being considered by the government. The government wants to exercise restraint in introducing or expanding new tax schemes such as a reduced VAT rate. This is because the (effectiveness of a) reduced VAT rate is currently being evaluated (in a general sense) by the Ministry of Finance.”

In Germany, feminine hygiene products have been subjected to the reduced sales tax rate of 7% since January 2020, shares the spokesperson at the Ministry of Finance. “This way, Germany is using the leeway provided by the European guidelines for setting tax rates. Additional changes are currently not planned.”

In related developments, the Scottish government implemented the Period Products Act last August, enabling consumers to access free menstruation products across the country. 

By Venya Patel and Marc Cervera