I propose to take Questions Nos. 177 and 178 together.
I am advised by Revenue that the provisions of the EU Directive are transposed into Irish VAT law, which is interpreted by the Irish Courts based on the principles and purpose of the Directive. Interpretation of this legislation evolves on a continuous basis, as a result of judgements handed down by Irish courts and, ultimately, the CJEU. Revenue continuously reviews its interpretation of VAT legislation in line with these judgements. In addition, the European Commission may challenge any Member State where they take the view that the VAT treatment of particular transactions or activities by a Member State are not in accordance with the VAT Directive.
The Directive does not specify the rate of VAT applying to the supply of every known product or service; it provides a framework for the application of rates to broad categories of goods or services. Within this framework there is room for differing interpretations of the legislation as to the rate of VAT applying to specific goods or services. In particular this may happen following the development of new goods or services. In these circumstances, Revenue and taxpayers interpret the law as it stands and if taxpayers disagree with Revenue’s interpretation they can appeal the matter to the Tax Appeal Commissioners and ultimately to the CJEU.
VAT legislation does not apply the zero rate of VAT to food supplements but shortly after the introduction of VAT 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 scope of the relatively narrow original zero rating of food supplement products permitted by Revenue 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 getting an expert report on the definition of food for the purposes of the VAT Consolidation Act, Revenue concluded that the status quo was no longer sustainable.
My Department has recently concluded a public consultation on the taxation of food supplement products. The consultation sought input from a wide range of interested parties, including from health and nutrition experts, as well as my colleague the Minister for Health, to ensure that any legislative changes brought forward are evidence based. The results of the consultation will be included in the 2019 VAT Tax Strategy Group paper as part of the Budget 2020 process.
I am also advised by Revenue that it is unable to provide information on the number of instances in which it advised taxpayers over the years 2011 to 2017 that particular food supplement products were zero rated.