VAT Ruling against Sports Supplements

BigDuffman

http://www.revenue.ie/en/practitioner/ebrief/2011/no-702011.html will have big implications in the sports supplements (and Irish Industry Jobs) in Ireland. More money grabbing by the revenue.

So judging by this ruling VAT will now be put on Protein Supplements and other sports supplement staples.

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

Discuss?

rubadub

This already happened a good while ago, there was lots of discussion since the myprotein site created a site in euros and many euro prices were higher than the sterling + irish VAT.

I was saying they could start marketing differently, e.g. there is no VAT on glucose if you buy it in the baby food section or in a homebrew shop (homebrew shops are usually cheapest BTW). But stick a pic of a lad running on the glucose pack and you pay VAT.

Same with protein, sell it as a baking good in the flour section and you're fine.

BigDuffman

rubadub wrote: »

This already happened a good while ago, there was lots of discussion since the myprotein site created a site in euros and many euro prices were higher than the sterling + irish VAT.

VAT has never been charged on protein supplements in the ROI as there was no ruling for it. It has recently been charged on some gainers etc. but protein supps (eg. whey, casein etc) have never been VAT rated. I'm not familiar with myprotein so can't really comment on why they were charging VAT

rubadub wrote: »

I was saying they could start marketing differently, e.g. there is no VAT on glucose if you buy it in the baby food section or in a homebrew shop (homebrew shops are usually cheapest BTW). But stick a pic of a lad running on the glucose pack and you pay VAT.

Unfortunately if this is read as per the revenue brief this will not work

"The following substances do not benefit from the Zero rate, even if labelled and marketed as food supplements"

Homebrew shops have glucose marked for baking. There is a huge difference between USN gluscose product profile as opposed homebrew.ie glucose.

Lack of foresight again from the Irish powers that be. As opposed to lining their coffers this may very well just mean Irish money goes elsewhere.

As you've mentioned Rubadub. They appear to be penalizing those active healthy users of sports nutrition but any couch potatoes out there can buy as much brewing ingredients as they like. Shocking.

Drink yourself stupid and suffer all the negative side effects on your health and resulting money lost on treating said ailments in hospitals. Where as those who take care of themselves are being punched in the pocket.

Mr. Incognito

Logic-

Food is Zero rated.

Luxury food items are liable to VAT.

A slimming aid is not necessary as part of a stable diet.

I have no issues with this personally.

Doug Cartel

BigDuffman wrote: »

Homebrew shops have glucose marked for baking. There is a huge difference between USN gluscose product profile as opposed homebrew.ie glucose.

Surely C6H12O6 is going to be the same regardless of who's selling it?

The only glucose powder I've ever used has come from the baking section of my local supermarket.

Barry.Oglesby

I don't see how anyone can have an issue with No Xplode or Megaslimobol being VAT rated. Whey is still VAT free afaik

BigDuffman

Doug Cartel wrote: »

Surely C6H12O6 is going to be the same regardless of who's selling it?
.

Thats the point which is so frustrating Doug..very little consistency to their argument!!

Barry.Oglesby wrote: »

Whey is still VAT free afaik

Its is for the moment as the companies have yet to start charging VAT out. One can assume that the larger suppliers will continue fighting the good fight to battle the ruling.

Doug Cartel

BigDuffman wrote: »

Thats the point which is so frustrating Doug..very little consistency to their argument!!

Sorry I misunderstood you, I thought you were saying that USN glucose had different ingredients to regular glucose.

In principal I agree that if they have the same ingredients/form then they should have the same tax, regardless of how they're marketed; but in practice, as long as the tax free version is widely available, I don't care, I'll just buy that.

The Guvnor

Protein is still a food supplement.

If VAT goes on protein the wider issue is how this affects the dairy/farming industry.

At what stage in the process is protein (whey) vatable - is it only when put in a tub for retail sale?

The revenue e-brief is from what I read no different to the laws that currently exist.

There is vat on most supplements/vitamins within the UK - protein is 0% and some co's zero rate creatine of all things.

Gainers with less than 50% carbs are zero rated but over 50% carbs are vatable, however carbs on their own are 0%!

Vat on protein would mean Irish protein sales would die a fast death as we'd all shop up north or in the UK or we'd do it even more so than we do now.

BigDuffman

The Guvnor wrote: »

Protein is still a food supplement.

If VAT goes on protein the wider issue is how this affects the dairy/farming industry.

At what stage in the process is protein (whey) vatable - is it only when put in a tub for retail sale?

It seems as if the revenue have just got a hard on for the sports supplements industry at the minute. The case will be argued as you have pointed out, the very narrow line where a substance becomes a sports nutrition / supplement product. Again the contradictions in any ruling will be mind boggling.

They usually resort back to the law of the "common / ordrinary man"...my response being define a common / ordinary man in relation to a sports supplements

The Guvnor

Very true BD - if they could write the legislation in a way that we could all understand due to it's clarity it would be great.

The simplest thing is to monitor whether the large chains such as Boots, Argos and H&B start to levy VAT on some of the products that they sell.

In Finland there is a 50 cent per kilo candy tax that gets levied on whey.

rubadub

BigDuffman wrote: »

VAT has never been charged on protein supplements in the ROI as there was no ruling for it.

I am 99% certain some companies did/do here, whether they had to or not is another issue. There are plenty of old threads about it, I kept mentioning it could be labelled as food.

Myprotein is one, Chainreactioncycles is up north and charges VAT on whey (with not added supps).

see the price increase 21% if you put your country as ireland
http://www.chainreactioncycles.com/Models.aspx?ModelID=38029

it also varies for other countries like france or germany.

If a company from the EU does over €35,000 of business to here in a year they must pay irish vat, so a smaller UK company can sell to here and not charge vat (if they definitely should).

Post from 2009 by Mickk who owns irish lifting who sell supps

Mickk wrote: »

Manhattan works for Ben Dunne and has been told (partially wrongly) by maximuscle to add vat to the products which used to be non vatable. It comes down to what is in the products whether there are vatable or not. Generally supplements aren't vatable (except for creatine and protein bars). I think maximuscle saw what rubadub quoted on the revenue website and panicked, they have told all their customers to add vat to everything.

Khannie

This came up a while ago. Whey is VAT free, but whey protein concentrate or isolate is not. Normal whey is actually very high in carbs.

Mellor

This section was left out of the OP

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.

Whey would be a extract or powder. But 2(c) and (d) are;

(c) Milk and preparations and extracts derived from milk.

(d) Preparations and extracts derived from meat, yeast or eggs

So whey and caesin or egg protein is exempt. But, soy protein or hemp protein isn't.

john_cappa

Mellor wrote: »

This section was left out of the OP



Whey would be a extract or powder. But 2(c) and (d) are;

(c) Milk and preparations and extracts derived from milk.

(d) Preparations and extracts derived from meat, yeast or eggs

So whey and caesin or egg protein is exempt. But, soy protein or hemp protein isn't.

where is the link to the table of exemptions?

Mellor

What I posted is the full text of part C and F of table E. It's directly from the regulations

john_cappa

Yeah I found it.

Its still not clear if whey should be VAT free. I think it is but the wording is open to interpretation!

BigDuffman

The point about "ergogenic aids" will counter any other exemptions in this case. It is open to interpretation by who ever is selling it. But we can be very sure that the revenue will inerpret it as VAT on whey till proven otherwise.

Mellor

john_cappa wrote: »

Yeah I found it.

Its still not clear if whey should be VAT free. I think it is but the wording is open to interpretation!

What part do you think is open to interpretation?

Reading the whole thing as one;

The following substances do not benefit from the Zero rate;
Beverages of any kind (including water), concentrates, crystals, essences, extracts, powders or other products for the preparation of beverages, unless they are Milk and preparations and extracts derived from milk.

BigDuffman wrote: »

The point about "ergogenic aids" will counter any other exemptions in this case. It is open to interpretation by who ever is selling it. But we can be very sure that the revenue will inerpret it as VAT on whey till proven otherwise.

"Erogenic" isn't part of the regulations though.
By the revenue explaination, its only items marketed as erogenic aids. If whey is sold as magic powder, then it gets VAT. If its sold as whey, it doesn't.

BigDuffman

Mellor wrote: »

What part do you think is open to interpretation?

Reading the whole thing as one;


"Erogenic" isn't part of the regulations though.
By the revenue explaination, its only items marketed as erogenic aids. If whey is sold as magic powder, then it gets VAT. If its sold as whey, it doesn't.

Which means that whey sold in Ireland will have VAT. What supplement company is going to amend their packaging and products to not advertise as an "ergogenic" aid purely for the Irish market (bar an Irish supplement company)?

We can interpret this how we like but will just have to wait and see come Dec / Jan! Fingers crossed for favourable result.

rubadub

BigDuffman wrote: »

What supplement company is going to amend their packaging and products to not advertise as an "ergogenic" aid purely for the Irish market (bar an Irish supplement company)?

One who does enough business here to make it worth their while. Shops here could easily overlabel too.

Myprotein whey has no claims on the actual packets I have. They have their own irish website so could possibly change the page just on it. The only "ergogenic" thing I see on the whey page I checked was "Ideal for building and repairing tissue", leave that off and their sales would increase hugely and most likely offset the small cost in changing a webpage.

same with the bulkpowder ones I got (not sure if bulkpowders do charge VAT here it is only if they do above €35,000 worth of business that they have to.)

It might not be just Ireland, some of the other countries hit by this could have similar VAT exemptions depending on if that lad on the packet is sporting a 12" Vs 17" bicep.

blatantrereg

rubadub wrote: »

One who does enough business here to make it worth their while. Shops here could easily overlabel too.

Myprotein whey has no claims on the actual packets I have. They have their own irish website so could possibly change the page just on it. The only "ergogenic" thing I see on the whey page I checked was "Ideal for building and repairing tissue", leave that off and their sales would increase hugely and most likely offset the small cost in changing a webpage.

same with the bulkpowder ones I got (not sure if bulkpowders do charge VAT here it is only if they do above €35,000 worth of business that they have to.)

It might not be just Ireland, some of the other countries hit by this could have similar VAT exemptions depending on if that lad on the packet is sporting a 12" Vs 17" bicep.

re the threshold at which you are obliged to charge VAT: I think it is €75k for goods or €37.5k for services.

Mellor

BigDuffman wrote: »

Which means that whey sold in Ireland will have VAT. What supplement company is going to amend their packaging and products to not advertise as an "ergogenic" aid purely for the Irish market (bar an Irish supplement company)?

Which companies market whey as erogenic aids to begin with?
Any of the ones I buy (myprotein, ON) market whey are 'pure, high quality whey". Highest rpecent of protein, high level of BCAAs etc. The only on that is anyway close is "Ideal for building and repairing tissue", which is easily removed as Rubadub said.

They market their gainers, recovery drinks, preWO supps etc as erogenic, but that aren't exempt from VAT anyway.

rubadub

blatantrereg wrote: »

re the threshold at which you are obliged to charge VAT: I think it is €75k for goods or €37.5k for services.

http://www.revenue.ie/en/tax/vat/leaflets/distance-sales-eu.html

Where the value of distance sales to persons in this State by a supplier in another Member State exceeds or is likely to exceed €35,000 in a calendar year, that supplier must register for VAT in this State and must account for VAT at the appropriate Irish rates

blatantrereg

rubadub wrote: »

http://www.revenue.ie/en/tax/vat/leaflets/distance-sales-eu.html

oic. My figures were for people inside the state

drdeadlift

Looks like this will not be going ahead

Think it had something to do with the eu quota on milk production ending in 2015.

The Guvnor

More info would be great dead and source if you can specify it.

drdeadlift

The Guvnor wrote: »

More info would be great dead and source if you can specify it.

I initially thought heads from glanbia nutritionals had arranged a meeting with the very brain child of the idea it turns out the heads of Glanbia arranged it.
I was yapping to a stock broker from goodbodys and he told me the bigger plans the kerry group/glanbia have in Ireland over the next few years(HE SAID THIS WOULD NEVER HAPPEN),case of the folks in the civil service not seeing further than their noses.
Anyway got the call from ON yesterday saying the planned ruling was overturned.

The Guvnor

Thanks Dr D!

It seems the wider impact on Ireland's dairly industry was the key issue. The dairy industry is not backward about coming forward with their opinions and lobbyists, thankfully!

GENETIC

Hi Guys - it would seem that there has been great conflict and misunderstanding on the VAT chargable by Irish Revenue on protein, specifically Whey protein. Could someone please clarify / confirm the latest for me if we are talking about sales within Ireland:

- VAT is chargable on normal sports nutrition items (energy drinks, bars, performance products etc)?

- VAT is chargable on WHEY protein if marketed (labelled) as a ERGOGENIC aid but not chargable if no reference is made to physical performance or physical enhancement?

- VAT is NOT chargable on protein formulas (all in one) that contain LESS than 50% carbohydrates as long as not marketed as ERGOGENIC AIDS?

I know this subject has been discussed in detail but there still seems to be confusion and contradiction.

Does anyone actuall know what Glanbia (ON) & Kinetica do with regards to this? Pricing would indicate that they dont add VAT on their Whey Protein powders.

Thank you