Written by Pieter Baert.
Equality between men and women is one of the key foundational principles of the European Union. Despite much progress, however, significant gaps persist between men and women regarding employment opportunities and income levels. Taxation can either mitigate or exacerbate these gender inequalities. On 13 January 2025, the European Parliament’s Subcommittee on Tax Matters (FISC) is due to hold a public hearing on the topic.
Implicit gender biases in joint taxation systems
In general, Member States do not differentiate explicitly between men and women in their tax systems. However, certain tax provisions may inadvertently carry implicit gender biases, often rooted in broader socio-economic and cultural factors.
One notable example is joint taxation, where married couples (or civil partners) file joint declarations, with household income taxed as a single unit. While a joint declaration does decrease the overall tax burden for the household, especially where there is significant income disparity between the two partners, it can also lead to a disproportionately higher marginal tax rate for the secondary earner (lower income earner), who often is a woman. This effect can make additional earnings less financially rewarding, discouraging women from entering the labour market or transitioning from part-time to full-time employment.
The consequences of these tax structures can contribute to broader gender inequalities by limiting women’s career advancement and undermining their economic independence in the long term. Joint taxation systems are increasingly being phased out, although several (European) countries continue to have them in place, on either a voluntary or a mandatory basis.
Although taxation remains largely a national prerogative, the European Commission has actively encouraged Member States to reform tax incentives that deter secondary earners from participating in the labour market. For example, the European Commission argued that Germany’s national recovery and resilience plan failed to address concerns about the country’s joint taxation system (‘Ehegattensplitting’), which, in the Commission’s opinion, reduces women’s potential for participating in the labour market.
VAT rates on feminine hygiene products and gender-based price discrimination
Over the years, the tax cost of menstrual products has been a topic of growing public debate. Since these products are used exclusively by women, the issue has gained attention for its gendered economic impact. Advocates for lowering or removing value added tax (VAT) on menstrual products argue that the tax places an unfair, systematic financial burden on women, and contributes to ‘period poverty‘. Unlike other consumer products, these goods are considered a matter of necessity rather than an expression of consumer choice.
In April 2022, a revision of the EU VAT Directive introduced greater flexibility for Member States to reduce VAT rates on female sanitary products. This change allowed Member States to lower the VAT rate to as little as 0 %, compared with the previous minimum rate of 5 % (Annex III, paragraph 3). The European Parliament urged Member States to take advantage of this increased flexibility. However, while several Member States have since reduced their VAT rates on such goods, practices remain quite divergent, as illustrated in Figure 1 below.
Tax policy experts are generally cautious about VAT rate reductions, citing the likelihood for suppliers to bypass these reductions by increasing their profit margins instead. However, a recent study by academics from the University of Vienna, which looked at VAT rate cuts on menstrual products in Austria, Belgium, France and Germany, found that the tax reduction had been fully passed on to consumers over time. With the lower price, households purchased products of higher quality, and low-income households increased their purchase volume of menstrual products, highlighting the potential of such reforms to improve access for disadvantaged groups.
While reducing VAT rates is one approach to making female hygiene products more affordable, some Member States and local governments have chosen to provide these goods for free in schools, public restrooms and other public spaces.
A related, and puzzling, phenomenon is that of gender-based price discrimination. Although not an explicit tax as such, this refers to the situation where women sometimes incur extra costs for products and services marketed to them compared with similar items for men, with the products differing often only in superficial aspects, such as colour, name or description. Common examples include shampoo, razors and hairdressing services. While no comprehensive EU-wide research has been conducted to assess the prevalence of such practices, a study by the German Federal Anti-Discrimination Agency examined over 1 500 products in Germany and found that female variants were priced higher in 2.3 % of cases, while male variants were more expensive in 1.4 % of cases.
EU Directive 2004/113 already prohibits discrimination in access to goods and services based on gender. In 2023, the European Commission said it had no plans at the time to introduce additional measures in that directive to address gender price discrimination.
Read this ‘at a glance’ note on ‘Taxation’s impact on gender equality in the EU‘ in the Think Tank pages of the European Parliament.
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