Revenue Tax Briefing

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Revenue Tax Briefing Issue 63, May 2006

Composite Meal Packages - VAT

VAT treatment of supplies of composite meal packages for a single consideration


The rates of VAT which apply to the supply of taxable goods or services are set out in Section 11(1) VAT Act 1972, as amended. While there are no other rates of VAT applicable, Revenue has in the past allowed certain traders in the fast food industry to compute their VAT liability on supplies of composite meals (where the component parts of the meals were taxable at different rates of VAT) by, in effect, using a ‘composite rate’ of VAT. This practice was designed to ease the administrative burden on the traders in question in complying with their VAT obligations.

What is a composite meal?

Meals of this type typically consist of items liable at different rates of VAT, being hot food liable at the reduced rate (currently 13.5%), and a soft drink liable at the standard rate (currently 21%).

These meals are commonly referred to as ‘value meals’ or by use of some similar generic term. A meal of this kind can be distinguished by the following characteristics:

  • It is marketed and sold as a package
  • It contains pre-defined components (some of which may be exchanged for similar pre-defined substitutes)
  • There is a standard single price payable for the meal.

VAT treatment of composite meals

The correct approach for meals of this type is for the trader to account for each of the items individually. This is especially appropriate in the fast-food market sector since many traders now use electronic point-of-sale (EPOS) systems, which are capable of segregating the total amount received between the different VAT rates.

However, where a trader satisfies the relevant local Revenue District that he/she is unable to segregate the total consideration in respect of the various components into the appropriate VAT rates, the trader concerned can use a methodology referred to as a “composite rate” in order to apportion the consideration received from the supply of composite meals between the VAT rates.

This composite rate is determined by means of a mathematical calculation based on the separation of the package of items into its components in accordance with the selling price of, and the VAT rate applicable to, each item. This results in the calculation of a special rate that is applied to the meal as a whole. The application of composite rates of this nature is a matter to be agreed with the relevant local Revenue District.

Changes in the prices of individual items

Where a composite rate has been agreed by a trader with the local Revenue District, the rate may continue to apply only where the ratio of the prices of the items to each other remains constant. Accordingly, any increase or decrease in the sale price of any of the individual items will require the composite rate applicable to the meal in question to be amended and agreed with the local Revenue District.


Where a discount is applied to the price of a single component of the meal, but not to the price of that component if sold separately, the discount should be apportioned across the different components in the ratio that formed the basis of the original calculations.

VAT treatment of composite meals from 1 January 2006

Traders who have electronic point of sale systems (EPOS)

Where a trader has facilities at point of sale to segregate the consideration received between the 21% and the 13.5% VAT rates, the trader should account for VAT on the individual components of the meal at the appropriate rates.

Traders who do not have facilities to account for VAT on the different components

Where a trader cannot segregate the receipts between the two VAT rates at point of sale, the local Revenue District may advise the trader that the VAT due on “composite meals” may be computed by using a composite rate. The following examples illustrate the methodology to be used to calculate the appropriate composite rate:

How to calculate the composite rate to be used?

Example A - how to calculate the composite rate to be used?

A composite meal (Meal A), with a selling price of €6 (including VAT), contains the following constituents:

Meal A - €6


VAT Rate %

Price (incl. VAT)




French fries



Soft drink



Apportionment of total consideration between VAT rates

13.5% Rate

6 × 5

= €4.61


VAT Exclusive €4.06

VAT included €0.55

21% Rate

6 × 1.5

= €1.39


VAT Exclusive €1.15

VAT included €0.24

Total VAT included in composite meal €0.79.

VAT Exclusive price of the composite meal is €5.21.

Composite rate is 15.16314%.

Example B

Assume the trader also sells another type of composite meal, Meal B, for €5, with the components as follows:

Meal B - €5


VAT Rate %

Price (incl. VAT)




French Fries



Soft Drink






Apportionment of total consideration between VAT rates

13.5% Rate

5 × 5.75

= €3.71


VAT Exclusive €3.27

VAT included €0.44

21% Rate

5 × 2

= €1.29


VAT Exclusive €1.07

VAT included €0.22

Total VAT included in composite meal €0.66.

VAT Exclusive price of the composite meal is €4.34.

Composite rate is 15.207%.

This type of calculation should be carried out in respect of each type of composite meal sold in each VAT period.


These should be treated as set out at paragraph 5 above.


In some instances, toys may be supplied as part of the composite meal deal.

Where the trader does not also sell the toys separately, the VAT inclusive cost of the toys should be included in the computation as being goods chargeable at the 21% rate.

Where the toys are also sold separately, the trader should include the VAT inclusive selling price of the toy in the computation as being goods chargeable at the 21% rate.

Return of Trading Details

Traders should show the actual figures for sales at the rates of 13.5% and 21% when completing the annual return of trading details.