FRANCE: VAT RATES APPLICABLE TO SALES OF PRODUCTS FOR HUMAN CONSUMPTION FLAVOURED WITH WINE OR BEER
In France, the standard VAT rate is 20% according to article 278 of the French Tax Code (Code général des impôts – « CGI »). However, depending on the products sold, the VAT rate applicable to them may vary significantly.
VAT rates applicable to products intended for human consumption and alcoholic beverages
Article 278-0 bis of the CGI states that products intended for human consumption are taxed at the reduced VAT rate of 5.5%, while alcoholic beverages are taxed at the rate of 20% if their alcoholic strength by volume is equal to or greater than 1.2% for wine and 0.5% for beer.
On June 29, 2010, the French tax administration was questioned, in the context of a request for a tax rescript, on the VAT rate applicable to the sale of wine or beer flavoured ice creams, not intended for immediate consumption.
The position of the French tax administration
Firstly, the tax administration recalled the content of article 278-0 bis, indicating that VAT is levied at the reduced rate of 5.5% for operations involving water, non-alcoholic beverages and products intended for human consumption.
Note: the CJEU has also had the opportunity to define the contours of this concept by indicating that it refers to: "all products containing nutrients which constitute, energize and regulate the human body and which are necessary for the maintenance, functioning and development of that body, and which are consumed in order to supply those nutrients to the body" (CJEU, judgment of October 1, 2020, case C-331/19).
Secondly, the administration advised that food ingredients and additives - defined as various products, of natural or synthetic origin, normally intended to be incorporated into food products - are subject to the same VAT rate as the food carriers to which they are attached. This position is already the subject of a publication in its official bulletin, dedicated to the reduced VAT rate applicable to products intended for human consumption.
Thirdly, the administration defined the notion of beverage by indicating that it constitutes a product for which the liquid element is preponderant and that if this product contains traces of alcohol higher than 1.2% vol., it will be considered as an alcoholic beverage subject to the standard VAT rate of 20%.
Therefore, the addition of wine or beer, as ingredients or aromatic food additives, in a food preparation to which they are incorporated has no impact on the VAT regime applicable to the final preparation, provided that this addition does not have the effect of making the liquid element predominant i.e. for the application of the reduced VAT rate of 5.5%, the addition of alcohol must not have the effect of transforming the product intended for human consumption into an alcoholic drink.
The administration thus confirmed that the take-away sale, not intended for immediate consumption, of food ice cream flavoured with wine or beer are subject to the reduced VAT rate of 5.5% applied to products intended for human consumption.
According to our analysis, in addition to the condition of non-preponderance of the liquid element altering the food product, the nature of the take-away sale also seems to us to be decisive.
Indeed, the application of the reduced VAT rate of 5.5% is also conditioned by the fact that the take-away sale is not intended for immediate consumption of the product; i.e. not intended to be consumed in the moments following the purchase and not intended for conservation of the product by the consumer.
This clarification remains enlightening since the takeaway sale of food products prepared for immediate consumption will be taxed at the reduced VAT rate of 10%.