Too much sugar keeps Subway's rolls from being classified as bread in Ireland

Ireland's Supreme Court ruled that the rolls that Subway uses in its hot sandwiches contain too much sugar to be considered as bread and entitled to zero VAT charges.

The court concluded that the sugar content is around 10 percent of the flour in the dough for both Subway's wholegrain and white rolls, subjecting it to a tax rate of 13.5 percent.

Ireland's VAT Act of 1972 classifies bread as a "staple product" and made it VAT-exempt.

However, ingredients such as sugar and fat should not exceed 2 percent of the weight of flour in the dough to be classified as bread.

Bookfinders Ltd, an Irish franchisee of Subway, requested a refund on VAT payments it made between 2004 and 2005.

But Ireland's tax authority refused Bookfinders' in 2006.

Bookfinders had taken the case to an appeal commissioner, the High Court, and the Court of Appeal, where it was unsuccessful.