Finance Bill 2019 Value Added Tax

Oct 21, 2019

Finance Bill 2019 introduces a provision that, with effect from 1 January 2020, food supplements will be subject to VAT at 13.5 percent.  A concessionary zero rating has applied to these products.   The change from zero to 13.5 percent VAT rate follows a comprehensive review by Revenue of the VAT treatment of food supplements, engagement with the Department of Finance in 2018 concerning policy options, publication of Revenue guidance in December 2018 and a public consultation in May of this year.  Revenue will not, as previously was announced, apply a 23 percent VAT rate to these products. 

There was no change to the rate in Finance Bill 2018, but Revenue did issue guidance in December 2018 which removed the concessionary zero rating of various food supplement products with effect from 1 March 2019. However, the withdrawal of Revenue’s concessionary zero rating of the food supplement products was delayed until 1 November 2019 to allow time for the Department of Finance to carry out a public consultation on the taxation of food supplement products.  This consultation ran to 24 May 2019 and the results of the consultation were included in the 2019 VAT Tax Strategy Group paper as part of the Budget 2020 process. Revenue will not apply VAT at 23 percent from 1 November 2019. The zero rate continues until 31 December 2019.  From 1 January 2020, the 13.5 percent rate will apply per section 54 of the Bill.

The change introduced in Finance Bill 2019 will not impact certain products, these are:

  • Foods for specific groups are well established and defined categories of food that are essential for vulnerable groups of the population. These products include infant formula, baby food, food for special medical purposes and total diet replacement for weight control.
  • Human oral medicines that are licensed or authorised by the HPRA are zero rated for VAT purposes under a different provision. This includes certain folic acid and other vitamin and mineral products for oral use. Once such products are licensed / authorised by the HPRA as medicines they are zero rated for VAT purposes.
  • Fortified foods are foods that are enriched with vitamins and/or minerals. Examples include fortified cereals or yoghurts.