A tax on health? Irish government threaten to tax supplements…again

By Will Chu

- Last updated on GMT

Proposed plans could see food supplements such as probiotics and Omega 3 fatty acids subject to a VAT rate of up to 23% in moves set out by the Irish government in time for January next year.

According to Irish authorities, the proposals would look to increase the standard rate of VAT on food supplements, which have been exempt from this levy since November 1972.

In addition to probiotics, the tax would apply to vitamins, minerals and folic acid to name a few.

“Alan McGrath, Health Stores Ireland, which represents the retail health food sector, said, “Applying VAT to food supplements would be completely inconsistent with the way they are regulated and with current Government policy on health”.

“We expect there to be a wave of customer anger when people find products considered to be necessary to health are to be taxed by a government struggling to provide decent healthcare,” ​added Matt Ronan from Evolv Health Store, an Irish-based business specialising in health, nutrition, and alternative and complementary medicine.

Food supplements not ‘luxury’

Up to now food supplements have not been considered as luxury items by successive Irish governments which is where most consumer purchases would incur VAT.

According to Health Stores Ireland, this now looks to have changed as the Revenue wish to impose some degree of tax upon each purchase, whether it be 13.5% or indeed the upper rate of 23%.

Particular concern is directed at babies, who are prescribed vitamin D during the long winter months as well as the over 55s, who use joint-related supplementation such as Glucosamine Sulphate to keep healthy and maintain employment.

The government’s proposals are a repeat of 2014 plans in which authorities threatened to place a 23% VAT levy herbal teas as well as health supplements.

However, the Irish Association of Health Stores (IAHS) told members in June of that year that the higher VAT rate would not apply to herbal teas due in part to “industry lobbying”.

We have been here before with herbal teas with the same arguments. In that case the Government backed down from applying VAT,​said tax advisor Ciaran Hurley.

“Health food retailers say that their customers will see it to be more a case of the government looking for yet another easy way to tax the consumers pocket and they will vehemently resist this move.”

Government response

A spokesperson for the Department of Finance told the Irish Times​ that the concession was proving to be “extremely problematic”.

“There are concerns that while elements of the food supplement industry apply the correct rates across non-zero rated products, others seek a competitive advantage by applying the zero rate to products that are properly liable at the 23% VAT rate.”

The newspaper also reported that following talks between Revenue, the Department of Health and the Department of Finance, doubts were voiced about the implications any change might have on the promotion of food supplements in certain circumstances.

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