Irish Supreme Court Says Subway Bread Can't Legally Be Called Bread Under Tax Law

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A worker wears a face mask while making a sandwich in a Subway store on June 12, 2020 in London, England.
A worker wears a face mask while making a sandwich in a Subway store on June 12, 2020 in London, England.
Photo: Peter Summers (Getty Images)

Ireland’s Supreme Court has ruled that bread from the international fast food chain Subway can’t legally be called bread under Irish tax law. The problem? Subway’s bread simply has too much sugar and must be considered a “confectionary.”

The ruling, first reported by Ireland’s Independent and available online through the Republic of Ireland’s Supreme Court website, was delivered on Tuesday and is incredibly dense reading. The court noted that Subway’s bread has a sugar content of roughly 10% of the flour’s weight. The amount of sugar in the dough would need to be 2% of the flour’s weight to be considered “bread” under Irish tax law.

The case made its way to the Supreme Court because Subway’s Irish franchisee, a company called Bookfinders, was trying to argue that it shouldn’t have to pay Ireland’s national sales tax, known as a “value-added tax” (VAT) in Europe. 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. 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.


The 51-page document posted online explains the rather extensive history of the case, which centers around the wording of the 1972 law that defines the foods and beverages subject to Ireland’s 13.5% value added tax. Aside from excluding staples, the tax is only applied to food and drinks consumed on restaurant premises, which only amount to about 20-30% of Subway’s sales in Ireland. If you took the food home to eat it, the tax wouldn’t be applied.

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.


But in the end, the case really did seem to hinge on the question of what this 1972 law defined as “bread.” The Subway franchisee argued that the focus should be on whether a sandwich is considered basic “food and drink” more broadly under the law, which would grant it an exemption, while Ireland’s Revenue Commissioners argued the courts should drill deeper into the definition of those products.

The original 1972 law defines bread as containing:

fat, sugar and bread improver, subject to the limitation that the weight of any ingredients specified in the sub clause shall not exceed 2 per cent of the weight of flour included in the dough


The ruling noted that it seems pretty clear anything added to the product that exceeds 2% of the flour’s weight would not be considered “bread” for the purposes of the VAT.

From the Irish Supreme Court ruling:

However, it is not necessary to consider if this is indeed what is contemplated by the 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.


Anecdotally, I can say that my wife, who’s originally from Australia, was horrified to see our sliced bread selections when she moved to the U.S. Virtually every loaf at our local grocery store had a lot of sugar, something I’d never really given any thought to, having always lived with America’s food system.

To take just one example of a product we used to buy, one slice of Arnold’s 100% Natural Whole Wheat Bread contains four grams of sugar. The bread’s packaging says “no added nonsense,” but there’s no regulatory meaning of the word “nonsense” under U.S. law. To make bread, you need flour, salt, yeast, and sugar. How much of each ingredient a baker uses is entirely up to the manufacturer, and you can still get away with implying that a product like that has no “added” ingredients like sugar—at least in the U.S.


Compare that single slice of Arnold’s bread, containing four grams of sugar, to a “fun size” Almond Joy candy bar, which has eight grams of sugar. Once you’ve eaten two slices of Arnold’s bread you’ve basically eaten a fun-size candy bar. And it’s not just bread. American food and drink products like fruit juice are notorious for having too much sugar. As we reported in 2014, a small 10-ounce bottle of Naked’s Green Machine drink has 35 grams of sugar. If you compare that to 10 ounces of Pepsi, which is owned by the same company, the soda has 34 grams of sugar.

Admittedly, it’s not just the U.S. that has very sugary bread. Sweden’s bread has up to 10% sugar as well, according to a study from 2018. But it’s sometimes a shock for Americans to learn that much of the rest of the world isn’t essentially forced to consume products with tons of sugar simply because those sweeteners are being snuck into seemingly innocuous products.


Speaking for myself, I spent many years with no idea just how much sugar was in everyday products like bread and that other countries had different health standards. And I’m sure plenty of other Americans had no idea as well.