The Supreme Court of Ireland has ruled that bread served by Subway restaurants does not meet the government's legal definition of bread because its sugar content is too high.
The Irish government has legal standards for what qualifies as "essential food" and is, therefore, exempt from the country's Value Added Tax (VAT Tax). One standard for bread is that the weight of the sugar in the dough must not exceed 2% of the weight of flour in the dough. For all bread served at Subway restaurants in Ireland, the weight of the sugar in the dough is about 10% of the weight of the flour.
A Subway franchisee, Bookfinders Ltd., brought the matter to the courts after the government's Revenue Commissioners refused in 2006 to give the company a refund for VAT payments made on bread purchases in 2004 and 2005.
"The argument depends on the acceptance of the prior contention that the Subway heated sandwich contains 'bread' as defined, and therefore can be said to be food for the purposes of the Second Schedule rather than confectionary," the Supreme Court's decision read, in part. "Since that argument has been rejected, this subsidiary argument must fail."