In France, the standard VAT rate is 20% according to article 278 of the General Tax Code (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 tax authorities had the opportunity to be questioned, within the framework of a request for a rescript, on the VAT rate applicable to the sale of wine or beer flavored ice creams, not intended for immediate consumption.
The position of the French tax authorities
Firstly, the tax authorities remind us of 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 also had the opportunity to define the contours of this concept by indicating that it covers: "all products containing constituent, energy and regulatory nutrients of the human body, necessary for the maintenance, functioning and development of this body, consumed in order to provide these nutrients to it".CJEU, judgment of 1 October 2020, case C-331/19
Secondly, the administration recalls 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 foodstuffs to which they are attached. This position is already the subject of a publication in the Bulletin officiel des Finances Publiques dedicated to the reduced VAT rate applicable to products intended for human consumption.
Thirdly, the administration defines 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 normal VAT rate of 20%.
Therefore, the addition of wine or beer, as aromatic food ingredients or additives, to a food preparation to which they are incorporated has no impact on the VAT system applicable to the final preparation, as long as this addition does not have the effect of making the liquid element predominant.
Ultimately, what rate of VAT applies to an alcohol-flavored product sold for take-out?
In other words, 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 concludes by confirming that the sale to take away, not intended for immediate consumption, of food ice creams flavored with wine or beer is subject to the reduced VAT rate of 5.5% applied to products intended for human consumption.
CQFD you may say, but to go further...
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%.