Revenue eBrief No. 70/11
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14 November 2011
Value-Added Tax - Bakery Products and Food Supplements
The purpose of this eBrief is to clarify Revenue's VAT treatment of Bakery Products and Food Supplements.
The supply of bakery products such as cakes, biscuits, bagels and croissants, being flour or egg based bakery products, is liable to VAT at the reduced rate of 13.5% in accordance with paragraph 3(5) of Schedule 3 of the Value-Added Tax Consolidation Act (VATCA) 2010, as amended.
The supply of bread that meets the ingredient definition in paragraph 8(1) of Schedule 2 of the VATCA 2010 is liable to VAT at the Zero rate. The ingredient definition of bread is very specific and although products, such as garlic bread, onion bread and fennel bread are marketed as bread, these products do not generally conform to the ingredient definition of bread in the VATCA 2010 and do not therefore qualify for the Zero rate of VAT.
Certain food supplements may benefit from the Zero rate of VAT. The zero-rating of food and drink of a kind used for human consumption, with the exception of the items specified in Table 1 (the Table), is provided for in paragraph 8 of Schedule 2 of the VATCA 2010, as amended. This zero-rating of food and drink is in accordance with Article 110 of the VAT Directive, which permits the retention of this rate for "clearly defined social reasons" that "benefit the final consumer". In interpreting Paragraph 8, the words “food” and "drink" must be given their everyday and ordinary meanings.
Food supplements that may benefit from the Zero rate must fall within the ordinary and everyday meaning of “food” and not be equivalent to any of the items specified in the Table. The supplement must encourage the maintenance of health, through the sustenance derived from a normal, healthy diet, to meet the social reasons criteria that apply to goods benefiting from the Zero rate. The key consideration is whether the food supplement is one that forms part of a person's normal diet for the purposes of sustenance as opposed to enhancing a person's diet with a view to achieving a particular aim. The former can benefit from the Zero rate. The latter, which includes a food supplement taken for the purposes of muscle growth or body mass increase, or for the purposes of weight reduction or bodily sculpture, cannot benefit from the Zero rate.
The Zero rate applies to the following substances, whether they are marketed as food supplements or not, provided they are formulated to make good the potential shortfall from the nutrition required for a normal, healthy diet:
- Vitamins and minerals in solid form, such as capsules, tablets, pills or lozenges, intended for oral consumption without further preparation;
- Vitamins and minerals in liquid form intended for oral consumption without further preparation, but not including beverages such as high vitamin drinks;
- Fish oils for oral consumption.
The following substances do not benefit from the Zero rate, even if labelled and marketed as food supplements:
- Substances marketed specifically to improve sporting or physical performance, e.g. ergogenic aids;
- Substances marketed specifically for the purpose of bodily sculpture or weight reduction, e.g. slimming aids;
- Substances that, although consisting in whole or in part of ingredients regarded as food supplements, are marketed for use other than for human consumption, such as, liniments, ointments and rubs.
- Substances in the form of bars or sweets or any other form similar to confectionery coming within the scope of column 1 of Part F of the Table;
- Beverages of any kind (including water), concentrates, crystals, essences, extracts, powders or other products for the preparation of beverages, unless they come within the scope of column 2(c) or (d) of Part E of the Table.