News and Commentary

Court Rules Subway Sandwich Bread Can’t Be Considered ‘Bread’

High sugar content makes it a "confectionary."
SYDNEY, AUSTRALIA - OCTOBER 23: Ian Laing, Foodbank Australia, GM of Strategic Partnerships, Erin Holland, Amanda Templeton, Subway Australia Corporate Social Responsibility Regional Manager attend the launch of World Sandwich Day on October 23, 2019 in Sydney, Australia. World Sandwich Day, Subway's largest charity fundraiser, will be held on November 1. (Photo by
Hanna Lassen/WireImage

When is bread not bread? When it comes from Subway.

That’s what Ireland’s Supreme Court has ruled, deeming the bread from the international sandwich chain has too much sugar in it and must therefore be considered a “confectionary.”

The ruling was important because it means the chain’s sandwiches do not qualify as a staple food, for which there is no value-added tax (VAT). The court rejected arguments by a Subway franchisee that the VAT should not apply to its takeaway products, including teas, coffees, and heated filled sandwiches, The Irish Independent reported. That means the VAT of 13.5% applies if the sandwich is consumed on site.

“The five-judge court ruled the bread in Subway’s heated sandwiches falls outside that statutory definition because it has a sugar content of [10%] of the weight of the flour included in the dough,” the U.K. paper wrote. “The act provides the weight of ingredients such as sugar, fat and bread improver shall not exceed [2%] of the weight of flour in the dough.”

“It is not necessary,” the court said in its ruling, “to consider if this is indeed what is contemplated by the [VAT] Act when it refers to the supply of food and drink, including food and drink which has been heated et cetera, because 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 confectionery. Since that argument has been rejected, this subsidiary argument must fail.”

Six varieties of Subway bread — Italian white bread, nine-grain multi-seed, Italian herbs and cheese, nine-grain wheat, hearty Italian, and honey oat — all do not qualify as “bread” because of their sugar content, the court ruled.

The case came before the high court after a Subway franchisee, Bookfinders Ltd, based in Tuam, County Galway, argued that the VAT on some of its takeaway products should not apply. But Justice Donal O’Donnell said because sandwiches do not contain “bread” as defined by the VAT law, it could not be said to be “food” for tax purposes.

“Staple foods like bread and milk are exempt from the tax, but non-essential foods that have been prepared, along with anything considered ‘discretionary indulgences’ as the court ruling phrased it, are taxed,” Gizmodo reported. “That would mean things like ice cream and potato chips are taxed under the law as currently written, but it left open the question of whether a sandwich at Subway was an indulgence.”

“There was also dispute about whether hot and cold food should be treated differently, meaning that a cold sandwich would not be taxed and a heated meatball sub would be taxed. Hot beverages like coffee and tea are specifically exempt from the tax but there was a question of whether that applied to purchasing a dry tea bag versus someone at a restaurant handing you a hot cup of tea. The ruling devotes several pages to what Irish legislators intended to mean when they wrote the words ‘hot beverages’ and ‘food and drink’ over 40 years ago. It gets very complicated very quickly. Ultimately, the court found that cold sandwiches were technically exempt from the law,” Gizmodo wrote.

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