VAT legislation does not specifically apply the zero rate of VAT to food supplements but shortly after the introduction of VAT in 1972 Revenue applied a concessionary zero rating to certain vitamin, mineral and fish oil products. As the market developed over the years this treatment resulted in the zero rating by Revenue of further similar products, including products other than vitamins, minerals and fish oils, and these rulings were published in Revenue’s VAT rates database. The evolution of the scope of the concessionary treatment of certain types of food supplements was well understood by the industry and by agents representing clients in the food supplements sector. The scope had broadened progressively over time to the point that it had become increasingly difficult to maintain an effective distinction between food supplements that could benefit from the zero rate and those that were standard rated.
After undertaking a comprehensive review of the VAT treatment of food supplements, including commissioning an expert report on the definition of food for the purposes of the VAT Consolidation Act, 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 Budget 2020, including the opening of a public consultation. Revenue decided to extend the date of the removal of the zero rating from March to November 2019, to allow for the enactment of any potential legislative changes in the context of Budget 2020.
The public consultation in relation to the appropriate VAT rate for food supplements closed on 24 May.
Officials in my department are reviewing the submissions received and the outcome of this review will be presented to a meeting of the Tax Strategy Group (TSG) on 9th July. The TSG Papers will be published on the Department's website shortly afterwards.