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 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 and has never been disputed by Revenue. Revenue has referenced the original scope of its zero rating concession but acknowledged that 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 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 and 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 Bill 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 enactment of any legislative changes in the context of Budget 2020.
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 health and nutrition experts as well as my colleague the Minister for Health, to ensure that any legislative changes brought forward are evidence based. Officials in my department are considering the submissions received and a report was submitted to the Tax Strategy Group on 9th July. The TSG papers are due to be published on my Department's website by the end of July.