London (CNN Business)Bread in Subway’s hot sandwiches contains too much sugar to meet Ireland’s legal definition for bread, the country’s Supreme Court has ruled.
The judgment was handed down on Tuesday in response to a Subway franchisee who had appealed for a tax refund, arguing that its bread is a “staple” food and therefore subject to a 0% tax rate.
Five judges considered the case, determining that Subway bread has too much sugar in it to be part of this category, and is therefore subject to a higher tax.
“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,” Justice Donal O’Donnell said when delivering the judgment.
Under Ireland’s Tax Act 1972, the sugar content should not exceed 2% of the weight of flour in the dough.
O’Donnell rejected arguments from the franchisee, Bookfinders Ltd, and ruled that “the resulting product falls outside the definition of ‘bread’ for the purposes of the Act.”
A spokesperson for Subway said in a statement to CNN: “Subway’s bread is, of course, bread. 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.”
CNN has contacted Bookfinders Ltd for comment.
Subway is the world’s largest fast food chain. There are 145 Subway locations in Ireland, according to the company website, with more than 22,000 in the United States and around 38,000 worldwide.
In 2018, the chain closed more than 1,000 locations in the US as part of a downsizing effort after struggling to adapt to more health-conscious, tech-savvy customers.
It has attempted to adapt to shifting consumer preferences by trialing the meatless Beyond Meatball sub in September 2019, which used plant-based protein.
The trial meant Subway joined a growing number of fast food chains testing out menu items featuring meat substitutes.
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