Tuesday, 16 January 2018
Department of Finance
Ireland Strategic Investment Fund Capital
Article 4 of EU Directive 92/83/EEC provides for the application of reduced rates, or relief, of excise duty of up to 50% less than the national rate of excise duty in respect of breweries producing 200,000 hectolitres or less of beer per annum. In Budget 2005, relief of 50% on excise duty in respect of beer produced by breweries producing up to 20,000 hectolitres (hl) per annum was provided to reduce barriers of entry and to promote competition in the brewery sector. Accordingly, the duty of excise on a 4.3% ABV pint of beer produced by a microbrewery is €0.27 compared to €0.54 on a 4.3% ABV non-qualifying pint of beer.
In Budget 2015, the relief limit was extended to microbreweries producing not more than 30,000 hectolitres.
As of Budget 2016, the Alcohol Products Tax relief for small independent breweries was made available by way of a reduction on the duty paid rather than through a repayment of excise. This improved the cash-flow of small independent breweries and removed a barrier to entry into this market.
Budget 2017 increased the qualifying production threshold for the relief from 30,000 hl to 40,000 hl with a corresponding increase for cooperating independent breweries from 60,000 hl to 80,000 hl. This allowed production to exceed the previous threshold, though the volume of beer on which the relief could be claimed remained unchanged at 30,000 hl.
It should be noted that in order to adhere to EU rules, these measures apply to any microbrewery within the European Union. It does not solely benefit indigenous microbreweries; importers in other EU member states that meet the criteria for this scheme and release supplies of beer for consumption in the State can also avail of the relief.
Figures from the Revenue Commissioners show that in 2016 there were 71 claimants of this relief, with the vast majority relating to beer produced in the State. The total value of the relief in 2016 was €4.089m, of which €4.03m related to beer produced in the State and €58,000 related to beer imported into the State from the EU.
There is no such relief available to small distilleries where the applicable EU regime is much less accommodating and where specific public health concerns arise.