Subway appeared in court in regards to the taxation on their bread.
In Ireland, essential foods – such as bread – are considered “staple products” and are charged with 0% VAT tax. In order for bread to be classed a “staple product”, it requires the fat and sugar levels to be no more than 2% of the overall flour weight. This would have been influenced by the WHO strongly recommending our sugar intakes be as low as 5% of our daily caloric intake.
The Irish franchisee argued they should not pay the VAT on the bread they used in their sandwiches, as it should be a “staple food”. “Subway breach is, of course, bread” claimed a spokesman for Subway. Despite this, the Court found that Subway’s sugar levels in their bread was actually around 10% of the flour weight! Thus, the bread is subject to 13.5% VAT tax and the franchisee for Subway will not be entitled to a refund for VAT tax.
This case bears a resemblance to the debate of whether ‘Jaffa Cakes’ are indeed a biscuit or cake, in order to determine the appropriate tax charge. However, this is not to condemn Subway. Despite the higher sugar levels, Subway sandwiches could still be part of a healthy, regulated diet.