Thursday, 26 September 2019

Questions (24)

Michael McGrath

Question:

24. Deputy Michael McGrath asked the Minister for Finance the status of the VAT treatment of food supplements; and if he will make a statement on the matter. [39057/19]

View answer

Written answers (Question to Finance)

Irish VAT legislation does not provide a zero rate for food supplement products; instead there is a legislative provision for zero rating food and drink. The zero rate for food and drink is provided for under a derogation from EU VAT law which allows Member States to retain certain zero rates for goods and services which were expressly covered in their national VAT legislation on 1 January 1991. The legislative provision for food and drink was in place on 1 January 1991, however there was no legislative provision for food supplement products and therefore they cannot be legally zero rated. 

Shortly after the introduction of VAT Revenue allowed the zero rate to be applied to certain food supplement products (vitamins, minerals and fish oils). This concessionary approach expanded as the market developed over the years and resulted in the zero rating by Revenue of further similar products, including products other than vitamins, minerals and fish oils. 

Revenue conducted a comprehensive review of the VAT treatment of food supplement products, including getting an expert report on the definition of food for the purposes of the VAT Consolidation Act. The expert prepared a detailed, scientific report that concluded that food supplement products are not conventional food. Based on the expert report and its own legal analysis, Revenue concluded that the status quo was no longer sustainable. 

Following this review, Revenue engaged with my Department concerning policy options that might be considered in the context of Finance Bill 2018. The relevant legislation was not changed in Finance Act 2018 and therefore Revenue issued new guidance in December 2018 which removed the concessionary zero rating of various food supplement products with effect from 1 March 2019. Following representation from Deputies and from the industry, I wrote to Revenue outlining my plans to examine the policy and legislative options for the taxation of food supplement products in the context of Finance Bill 2019. Revenue responded by delaying the withdrawal of its concessionary zero rating of the food supplement products concerned until 1 November 2019. This will allow time for the consideration of any legislative changes in the context of Budget 2020.