An Irish court has ruled that the bread sold by the US high street sandwich chain Subway is not actually bread.
The case was brought by the Subway franchisee Bookfinders Ltd., which was arguing that a number of its products are “staple foods”, and therefore should not be subject to VAT (value added tax) in Ireland.
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However, the court ruled that, under Ireland’s Value-Added Tax Act of 1972, Subway’s bread is not only not defined as bread, but also cannot be defined as a staple food, because of its high sugar content.
To constitute bread, the Irish Times reports, the Act states that the weight of ingredients such as sugar, fat and bread improver should not exceed 2 percent of the weight of the flour in the dough. Subway’s bread sugar content is 10 percent of the total flour content.
The case came about after Bookfinders Ltd. was refused a refund by Revenue – the Irish government agency responsible for taxation – for VAT payments made between early 2004 and late 2005. The company was subject to VAT at a composite rate of 9.2 percent, but argued the rate should have been that applied to staple goods: 0 percent.
An appeal commissioner upheld the Revenue refusal, so Bookfinders took the case to the High Court, where it lost. It also lost on appeal in the Court of Appeal, so the company took their argument to the Supreme Court, where, on Tuesday, they also lost.
In a judgment, Mr Justice O’Donnell said that some of the arguments put forward by those acting on behalf of Bookfinders were “ingenious”, but in the end the appeal was dismissed.
In response to the ruling, a spokesperson told VICE News, “Subway’s bread is, of course, bread. We have been baking fresh bread in our stores for more than three decades and our guests return each day for sandwiches made on bread that smells as good as it tastes.”
Chris Young, coordinator of the Real Bread Campaign, said: “We probably wouldn’t call the stuff Subway uses bread, either. The company is not as transparent as it could be about declaring its ingredients lists to UK customers, but, judging by Subway in other countries, they probably include a range of unnecessary additives. When it comes to added sugar, none is needed to make what is supposed to be a savoury product.”
This is not the first time Subway has been criticised for the doughy product it uses to encase its sandwich fillings. In 2014, following an online petition, the chain’s restaurants in the US removed the flour whitening agent azodicarbonamide from its baked products. Banned by Australia and the European Union, the chemical is regularly used in the manufacturing of yoga mats.
