Minister Donohoe signs Commencement Order for Alcohol Products Tax relief for craft producers

The Minister for Finance Paschal Donohoe has signed the Commencement Order for the extension of the Alcohol Products Tax relief scheme to ‘other fermented beverages’ (OFB) other than cider and perry which was provided for in the Finance Act 2024. This new relief will operate from 1 March 2025.

The effect of this relief is to reduce the Alcohol Products Tax rate for qualifying

independent small producers of OFB other than cider and perry by 50 per cent.

The relief complements a similar relief introduced for small producers of cider and perry in 2023.

In addition, the commencement order will also provide relief for qualifying producers of cider and perry with an alcohol volume above 8.5% from 1 March 2025.

Commenting on this matter Minister Donohoe said:

"Whilst from an overall perspective this is a relatively small relief, I acknowledge its importance to supporting domestic small scale producers and encouraging growth and investment within the sector. I believe the expansion of the relief scheme will also facilitate more innovation in the sector as well as having positive downstream impacts for development of the rural economy."

Minister for Enterprise, Tourism and Employment Peter Burke has also welcomed the extension of this relief:

"I welcome the extension of this relief and the support that this will provide to small, indigenous companies in rural Ireland. This change underscores the government’s commitment to providing targeted support to our SME sector and using all available policy tools to spur innovation and the development of new products and markets."

Notes

The structure of excise duties on alcohol and alcoholic beverages is harmonised across the EU under the Alcohol Structures Directive. This Directive sets out the categories of alcohol and alcoholic beverages, as well as the basis on which excise duties on such products are to be established. Amendment of this Directive in July 2020 provides Member States with the discretion to apply excise relief for small independent producers.

Budget 2023 introduced a relief scheme for micro producers of cider and perry. This scheme provides 50% relief on excise duty on cider and perry with an alcoholic volume above 2.8% and below 8.5% for independent small producers. Relief is available for qualifying small producers on up to 8,000 litres of cider and perry in a calendar year and in order to qualify a production threshold of 10,000 litres for the prior calendar year applies.

The signing of this commencement order extends the current relief scheme to include the category of ‘other fermented beverages other than cider and perry’. ‘Other fermented beverages other than cider and perry’ refers to ciders made from fruits other than apples or pears, fruit wine other than grapes and mead.

This measure will provide for relief of 50 per cent of alcohol excise paid by qualifying independent small producers for other fermented beverages other than cider and perry. Relief will be available to qualifying small producers on up to 8,000 hectolitres of other fermented beverages (including cider and perry) in a calendar year. In order to qualify for this relief the small producer must not have produced more than 10,000 hectolitres of other fermented beverages (including cider and perry) in the previous year.

The commencement order also removes the current threshold of 8.5 per cent volume for cider and perry products. The removal of the 8.5 per cent threshold extends the relief to the small number of producers of artisanal high strength ciders and perries which exceed 8.5 per cent alcoholic volume.

The expansion of the relief scheme is designed to support domestic, small-scale producers and to encourage growth and investment within the sector. It is also expected to facilitate more innovation in the sector as well as having positive downstream impacts for development of the rural economy.