In Lyon, a discussion about varying VAT rates on chocolate reveals confusion among locals. While some dark chocolates are taxed at 5.5%, others, including milk chocolate, face a 20% rate. Experts note that chocolate’s classification as a luxury item has led to these discrepancies, which include multiple VAT categories. The complexity extends to baked goods, with different rates for take-away versus dine-in. This tax puzzle highlights the absurdity of current regulations affecting consumers and businesses alike.
‘Craving some chocolate?’ This catchy phrase is a sure way to grab the attention of pedestrians in the vibrant streets of Lyon. The TF1 1 PM team has showcased a delightful assortment of chocolates in their basket. However, despite sharing a common ingredient, the VAT rates on these products can vary dramatically. A local resident, holding two bars, notes in the video: ‘Dark chocolate filled, 20% VAT. Dark chocolate, 5.5% VAT.’ He muses, ‘They must think pure dark chocolate is healthier than the rest, right?’ before commenting, ‘Honestly, the VAT situation can be quite absurd sometimes.’
This discrepancy isn’t an isolated incident. Another passerby, with two different chocolate bars, points out, ‘Classic milk chocolate is taxed at 20% VAT, while milk chocolate for baking is only 5.5% VAT.’ She shrugs, saying, ‘I have no clue why there’s such a difference.’ And it gets even more puzzling: dessert creams come with a VAT of 20%, whereas Nutella spread enjoys a reduced rate of 5.5% (new window), similar to bite-sized chocolate formats considered essential items.
The Confusion of Tax Categories
This tax jumble has even caught the attention of Dominique Schelcher, the president-director of U stores, who expressed his frustration during a Senate Economic Affairs Committee session on March 12. ‘Chocolate is subject to no less than 10 different VAT categories. It’s quite perplexing, and we’re at a loss: this is affecting us negatively.’ He humorously added, ‘After The Castle and The Trial, Kafka could have penned The Chocolate.’
So, what lies behind this administrative maze? Claire Fournier, an economics journalist at LCI, offers some insight: ‘Chocolate was initially classified as a luxury item, hence a VAT of 20% applied.’ She continues, ‘However, as new regulations emerged regarding basic necessities for the French, a reduced rate of 5.5% was introduced for certain items, including spreads and dark chocolate.’
It’s often the specifics that create confusion: the lower VAT rate applies to chocolates that can be consumed ‘in one bite, with a size not exceeding 5 cm.’ According to the website (new window) of the Confederation of Chocolatiers and Confectioners of France, this includes chocolate candies ‘not exceeding 5 cm in size and weighing no more than 20 grams,’ where chocolate constitutes ‘at least 25% of the total weight.’ Examples include fritters, discs, and pastilles.
The 5.5% VAT also covers products containing dried fruits mixed with 25% chocolate, chocolate dragees, and even orange peels, ‘even if they exceed 5 cm in length.’ This leniency helps to avoid intricate tax dilemmas.
And what happens with assorted chocolates that combine different types, like milk and dark chocolate, each with its own VAT rates? In such cases, a breakdown of the chocolate percentages is necessary. If that’s not feasible, the higher rate of 20% applies. Bakeries also face similar challenges: a take-away chocolate croissant is taxed at 5.5%, while enjoying it on-site incurs a 10% VAT.