Ireland's Supreme Court has ruled that Subway's sandwich rolls are not legally bread because of their high sugar content.
The case was brought to the court by a franchisee holder in County Galway that believed the bread should be exempt from value-added tax.
But the VAT Act 1972 has a narrow definition of tax-exempt bread, saying the fat, sugar, and bread improver can't exceed 2% of the weight of the flour.
Sugar accounts for 10% of the weight of the flour in Subway's rolls, making them too sugary to be considered tax-exempt bread.
A Subway spokesman told Business Insider on Thursday that its bread "is, of course, bread" and that employees bake it daily.
Subway sandwich rolls cannot be legally defined as bread in Ireland, the nation's Supreme Court recently ruled.
The case brought before the court was from Bookfinders Ltd., a Subway franchisee in County Galway that believed the rolls should be exempt from value-added tax. The judgment was delivered Tuesday.
In Ireland, certain staple foods like bread are exempt from VAT. But to differentiate between bread and baked goods, the VAT Act 1972 provides a specific definition of bread saying the fat, sugar, and bread improver should not account for more than 2% of the weight of the flour in the product.
Subway's sandwich rolls don't meet this definition because the sugar accounts for 10% of the weight of the flour, the five judges wrote.
In response to the ruling, a Subway spokesman told Business Insider on Thursday: "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."
It's not the first time the chain's bread has come under scrutiny. When reports in 2014 found that its bread contained a chemical also found in yoga mats, Subway immediately changed the recipe.
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