Dáil Éireann Debate, Tuesday - 24 June 2014
156. Deputy Martin Heydon asked the Minister for Finance if the health benefits of foods and drinks are considered when VAT rates on these items are being considered; the impact this consideration can have on the eventual VAT rate applied; and if he will make a statement on the matter. [27159/14]
View answerThe VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. The EU VAT Directive generally provides that supplies of goods and services be chargeable to VAT at the standard rate, but that a reduced rate of 5% or higher can apply to food and drink in certain circumstances. Ireland applies the 13.5% reduced VAT rate to bakery goods and catered food, while the standard VAT rate of 23% applies to alcohol, soft drinks, confectionary and snacks.
In addition, Member States can retain historical zero-rated VAT treatment under Article 110 of the EU VAT Directive, where a good or service was zero rated on and from 1 January 1991. Ireland applies the zero rate to most food. In this context, it is not possible to apply the zero rate to any new food and drink items that have not already applied at the zero rate, and where a decision is made to apply a positive VAT rate to food that is currently zero rated, it would not be possible to reintroduce the zero rate to that food.
The VAT rate applying to food and drink in Ireland was set many years ago and the historic VAT treatment places a limitation on the VAT policy options regarding food and drink. Nonetheless, the health benefits of food and drink is reflected in the historic VAT rating of food and drink. The 23% standard VAT rate in general applies to less healthy food and drink such as alcohol, soft drinks, confectionary and snacks, while the zero rate applies to fruit, vegetables, meat and dairy products.
