Member States urged to amend milk VAT ‘discrimination’: ‘The tax rate for plant milks should at least be the same for cow’s milk – or even lower’

By Flora Southey

- Last updated on GMT


Related tags Milk plant-based dairy Tax

ProVeg International is calling on national governments to end ‘unfair’ VAT on plant milks, which it claims fiscally favours dairy products over their plant-based alternatives.

A report analysing how value-added tax (VAT) attributed to cow’s milk differs to plant-based alternatives across Europe has revealed discrepancies in a number of EU countries.

In the Plant Milk Report​, ‘food awareness’ charity ProVeg International notes that six countries in Europe apply a ‘significantly higher’ VAT on plant-based milk compared to cow’s milk. This is the case for Germany, Italy, Spain, Greece, Slovakia, and Austria.

In Germany, VAT on cow’s milk is 7%, whereas soya milk incurs a VAT of 19% - marking a 171% increase for the plant-based alternative. In Spain, the rate is 150% higher, and in Italy, soya milk has a VAT rate 450% higher than cow’s milk.

A number of countries do not distinguish between cow’s milk and soya milk, including Belgium, Denmark, Finland, France, Ireland, the Netherlands, Portugal, and the UK.

‘Tax discrimination against plant-based milk’

For ProVeg, which aims to reduce global animal consumption by 50% by 2040, the fiscal discrepancies represent tax discrimination against plant-based milk.

“In Europe, the consumption of vegan dairy alternatives is hampered…by national fiscal regulations in many Member States,” ​notes the charity, explaining that national governments can decide on the level of the standard VAT rate – and apply up to two reduced VAT rates.

“Dairy products often fall under the reduce VAT rate, and therefore receive an indirect subsidy, meaning that the tax authority is waiving a part of the taxes. In some EU countries, this results in fiscally favouring dairy products from animals over their plant-based alternatives.”

Image source: ProVeg International

Environmental concerns: ‘We are in the midst of the climate crises'

The charity’s concerns relate to the environmental footprint associated with cow’s milk, compared to that made from plants.

“Plant milk is the top-selling product in the entire plant-based-alternatives market sector, offers numerous health benefits, and has a smaller ecological footprint than cow’s milk,” ​according to ProVeg CEO Sebastian Joy.

“Nevertheless, in some countries, plant milk production is politically disadvantaged due to unfair tax policies and frameworks for naming these products.”  

The study draws on Poore and Nemecek’s 2018 research​ into reducing food’s environmental impacts through producers and consumers. In their food production analysis, which evaluated data from 38,700 companies and 1,600 processing, and retail companies in 119 countries, the duo concluded that the transition to a amore plant-based diet could reduce land use by up to 76% and reduce greenhouse gas emissions from the food sector by up to 50%.

The researchers estimated that if consumers halved the consumption of any animal product and replaced with plant equivalents, up to 10.4 billion tonnes of CO₂ equivalent could be saved per year.

More specifically, Poore and Nemecek compared the environmental impact of different milks – both animal-derived and plant-based. Findings revealed that cow’s milk has the most significant environmental impact in terms of greenhouse gas emissions, land, and water use.

According to the research, for each litre of cow’s milk produced, nine square metres of land and 628L of water is required. Further, one litre of cow’s milk results in emissions of 3.2kg CO₂ equivalent.

Image source: ProVeg International

The varying environmental footprints of plant-based milks

While all plant-based milks are regarded as being more environmentally friendly than cow’s milk, they do not all produce the same amount of greenhouse gas emissions, nor require the same amount of land and water.

Almond milk is associated with the lowest greenhouse gas emissions at 0.7kg CO₂ equivalent per litre. Oat milk comes next, at 0.9kg CO₂ equivalent, followed by soya milk with 1kg CO₂ equivalent.

In terms of water use, almond milk requires the most – with 371L per litre of finished product. Soya and oat require 28L and 28L respectively.

A call for action

ProVeg has called on the ‘tax discrimination’ existing in certain EU countries to come to an end. “The tax rate for plant milks should be at least the same as for cow’s milk – or even lower due to the reduced environmental impact,” ​notes the charity.

Going beyond VAT concerns, ProVeg has also urged manufacturers of convenience products to swap out cow’s milk powder for plant-based alternatives in product formulation. “ProVeg supports companies in switching to plant-based production.”


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