Dáil Éireann Debate, Monday - 11 September 2023
430. Deputy Patrick Costello asked the Minister for Finance if he will reduce alcohol-free beverages VAT rate from 23% to 13.5% which is in line with the rate charged to other non-alcoholic beverages in the hospitality sector; and if he will make a statement on the matter. [37401/23]
View answerThe VAT rating of goods and services is subject to the requirements of the EU VAT Directive with which Irish VAT law must comply. In accordance with the Value-Added Consolidation Act, 2010 the supply of non-alcoholic drinks is generally liable to tax at the standard rate, currently 23%.
The VAT Directive obliges each Member State to have a standard rate of VAT and also allows that a Member State may choose to have up to two reduced rates of VAT which may be applied to certain goods and services i.e. any of those listed in Annex III of the Directive, which includes non-alcoholic beverages. Ireland currently operates two lower rates of VAT, 13.5% and 9%. At present, Ireland applies the 13.5% VAT rate to certain non-alcoholic beverages such as tea, coffee and fruit juices where they are supplied in the course of catering.
Restaurant services are liable to VAT at the reduced rate. However, supplies of alcohol, bottled waters, soft drinks, sports drinks and vegetable juices (excluding fruit juices) are liable to VAT at the standard rate even when provided as part of a restaurant service.
Any suggestion for extending the application of a reduced VAT rate further to non-alcoholic beverages would need to be considered carefully having regard to a range of factors including the impact on Exchequer revenues, and the practical concerns that it would be difficult to administer and would be likely to provide considerable scope for manipulation of the VAT system and opportunities for tax avoidance.
