(CMR) Subway restaurants in Ireland received a blow from the country's Supreme Court after they ruled that the starch used in Subway sandwiches are too sugary to meet the definition of “bread”. The fast-food chain was seeking a tax break for serving a “staple” food item.
All six of the company’s bread options — Italian white bread, Italian herbs and cheese, nine-grain wheat, hearty Italian, nine-grain multi-seed, and honey oat — were deemed too sugary by the court to qualify as bread.
Stable foods attract a zero VAT according to the Value-Added Tax Act 1972. However, the five-judge court ruled against the Subway franchisee qualifying for it because the bread contains too high of sugar content. The court's ruling was based on the fact that the sugar content is10 percent of the weight of the flour in the drought. The act provides the weight of ingredients such as sugar, fat, and bread improver shall not exceed 2 percent of the weight of flour in the dough.
Those limits are in place to prevent things like pastries and other sweet baked goods from being labeled as “staple foods” and exempt from being taxed.
Subway had initially applied for a refund for VAT statement made between early 2004 and late 2005. This was an appeal to the Revenue Commissioner's decision to deny the claim and is based primarily on heated sandwiches. Galway-based Bookfinders LTD said that it shouldn't have to pay VAT on hot coffee and tea, or on the hot sandwiches that weren't eaten inside the restaurant. An Appeal Commissioner also said that Subway's hot sandwiches were not eligible for a zero-percent tax rate, so Bookfinders was doubly denied.
The clear intention of the detailed definition of “bread” in the act was to distinguish between bread as a “staple” food, which should be 0 percent rated, and certain other baked goods made from dough, Mr. Justice Donal O'Donnell said. Its argument was that since the sandwiches contain bread, they should be considered a “staple food” and shouldn't be taxed. But the five Supreme Court judges countered by suggesting that those sandwiches aren't served on “bread” at all, at least not under the “statutory definition of bread.”
A 6-inch white bread roll has 5 grams of sugar — similar to that of an Oreo cookie. This is not the first time Subway restaurants have come under scrutiny for attempting to create an inaccurate healthy image as a franchise. In 2014 a petition was started to remove azodicarbonamide in the US-based franchises after claims it was harmful. The FDA approved ingredient is also found in yoga mats, shoe soles and synthetic leather. Australia and the European Union have discontinued its use in food products. The company eventually agreed to remove it.