Subway has restaurants in more than 100 countries all over the world, including 145 in Ireland. However, because of the amount of sugar in the sandwich chain’s bread recipe, the Irish government has determined that Subway must continue to pay taxes applied to value-added products.
Ireland is one of many countries that imposes a value-added tax (VAT) that applies to certain goods and services. Typically, bread is not subjected to this tax as it is considered to be a staple food.
Subway’s Irish franchisee, Bookfinders Ltd., thought this tax should not be applied to their restaurants’ bread. The company submitted a claim in 2006 asking for a refund for some of the VAT it paid in 2004 and 2005, arguing that the bread used in its sandwiches counted as a staple food.
When the claim was denied, the company sought several appeals regarding its various contentions (which include contesting the VAT on takeaway products such as teas, coffees, and heated, filled sandwiches). The appeals have resulted in a recent Supreme Court decision finding against Subway.
Upon consideration, the five-judge court ruled decided that the bread is not eligible for tax exemption. This is because Ireland’s Value-Added Tax Act of 1972 states that the amount of sugar in bread can’t exceed 2% of the weight of flour included in the dough to be considered a staple food.
“In this case, there is no dispute that the bread supplied by Subway in its heated sandwiches has a sugar content of 10% of the weight of the flour included in the dough,” the Supreme Court stated in its decision.
Because of this, the court determined that Subway’s sandwich rolls fall outside the legal definition of bread in this particular case.
The decision, written by Justice John O’Donnell, noted “…it is, I think, clear that if one ingredient exceeds the limitation, the resulting product falls outside the definition of ‘bread’ for the purposes of the Act.”
Subway’s response to the ruling expressed a contrary opinion.
“Subway’s bread is, of course, bread,” a Subway spokesperson told Yahoo Life.” We have been baking fresh bread in our restaurants for more than three decades, and our guests return each day for sandwiches made on bread that smells as good as it tastes.”
Dietary experts point out that many commercial breads use sugar to feed the yeast, and the definition of bread should not necessarily be based on how much sugar is in it. Additionally, Subway offers different types of bread with varying amounts of sugar, which do not appear to differ significantly from amounts found in white bread you can buy in grocery stores.
According to NPR, the company is reviewing the ruling.
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