The Irish Revenue Agency’s newly published guidance on its revised VAT treatment of food supplements has unleashed a furore in the health food sector.
Generally, food supplements are liable to VAT at the standard 23% VAT rate in Ireland. But currently a concession exists in relation to certain types of vitamins, minerals and fish oils. Under this concession, these products are classified as “food” for VAT purposes and hence enjoy the benefit of being taxed at the zero rate.
In a highly controversial move, as of 1st March 2019 this concession will be withdrawn and consequently the standard rate of VAT will apply to all food supplements.
According to the Revenue Agency, the reason for the change is that since the concession was granted, the previously small food supplement industry has undergone exponential growth and uncertainty exists over whether the correct VAT rates are consistently applied throughout the sector.
Human oral medicines, certain folic acid and other vitamin and mineral products for oral human consumption, infant foods, food for special medicinal purposes and specially formulated foods will remain subject to VAT at the zero rate.
If your business is impacted by this development and you would like further advice, please do contact us to find out how we can help you.