Revenue update on VAT treatment of food supplements

Today (26/02/2019), and in light of the Minister for Finance setting out plans to examine the policy and legislative options for the taxation of food supplements, Revenue has confirmed that the VAT treatment of food supplements will remain unchanged until 1 November 2019.

Following growing concerns of industry representative bodies about the difficulties in distinguishing between food supplement products which could be zero rated and those which should be standard rated, Revenue undertook a comprehensive review on the VAT treatment of food supplements. Following the review Revenue issued new guidance in December 2018, applicable from 1 March 2019.

On Monday (25/02/2019), the Minister for Finance wrote to Niall Cody, Chairman of the Revenue Commissioners, outlining that in the course of the Committee Stage debate on the Finance Bill last November he “gave a commitment to address the matter by means of a specific paper to the tax strategy group during the summer period”. At that time Minister Donohoe stated that “Independent of Revenue’s decisions on interpretation, I will put in place a process that will conclude in the TSG papers to examine some of the policy choices that could be available”.

In his letter, Minister Donohoe outlined that “To ensure that this policy review will be effective, I propose to issue a public consultation seeking engagement from all parties on the issue and to consult with my colleague, the Minister for Health, to ascertain his views on the use of food supplements”. Minister Donohoe added that he was “of the view that this approach provides a way of bringing forward the necessary analysis and information to facilitate my consideration of options regarding the legislative provisions concerning the VAT treatment of products in this sector”.

In support of the Minister’s proposed process of review, and to allow time for the enactment of any legislative changes (if any) as a result thereof in Budget 2020, Revenue has confirmed to Minister Donohoe that it will delay implementation of its new guidance until 1 November 2019.

Ends [26/02/2019]