I am advised by the Revenue Commissioners that VAT law in Ireland must comply with the EU VAT Directive. In this respect, while the majority of food products are already liable at the zero rate of VAT, food products can only benefit from zero rating in accordance with Article 110 of the VAT Directive which permits the retention of the zero rate for clearly defined social reasons where products were liable to VAT at the zero rate on 1 January 1991. Settled case law requires that such exemptions be strictly interpreted and narrowly applied so as not to create or increase divergence of VAT treatment among the EU Member States.
Paragraph 8 of Schedule 2 of the Value-Added Tax Consolidation Act 2010 provides that the supply of tea and preparations derived from tea when supplied in non-drinkable form are supplies of food and drink of a kind for human consumption that is liable to VAT at the zero rate. In this regard, Revenue take that view that tea as commonly understood means the dried crushed leaves of the tea plant, but not tea as would be understood to include herbal and fruit based infusions. This alternative interpretation has been raised by the sector in recent months with Revenue who, I understand, is giving the matter some initial consideration.