Irish Subway Franchisee's Arguments That It Is Not Liable For VAT On Several Products Rejected By Supreme Court

By Dave Simpson
Irish Subway Franchisee's Arguments That It Is Not Liable For VAT On Several Products Rejected By Supreme Court

Arguments by an Irish Subway franchisee that it is not liable for VAT on several of its takeaway products including heated filled sandwiches, teas and coffees have been rejected by the Supreme Court.

VAT Act 1972

According to The Irish Times, the appeal was made by Bookfinders Ltd, which is based in Tuam, Co. Galway, and included consideration of whether the bread used in Subway sandwiches falls outside of the statutory definition of bread intended under the VAT Act 1972 to attract a zero VAT rate.

The five-judge court ruled that Subway's bread falls outside of that statutory definition because its sugar content is 10% of the weight of the flour that is included in the bread's dough.

The VAT Act 1972 provides the weight of ingredients such as sugar, fat and bread improver shall not exceed 2% of the weight of flour in the dough of bread.

Mr Justice Donal O'Donnell said that the clear intention of the definition of bread in the Act was to distinguish between bread as a staple food, which should be 0% rated, and certain other baked goods made from dough.


O'Donnell stated that because Subway heated sandwiches do not use bread as defined, it cannot be said to be food for the purpose of the act.

Appeal History

Bookfinders Ltd's appeal arose from a decision by Revenue in 2006 to refuse the company a refund for VAT payments made between early 2004 and late 2005.

Bookfinders claimed a refund on the grounds that it was subject to VAT at a 9.2% composite rate when, the company argued, the VAT rate should have 0%.

Bookfinders took its appeal to the High Court after an appeal commissioner upheld Revenue's refusal of a refund, and the company lost there as well as on appeal to the Court of Appeal before the Supreme Court agreed to hear a further appeal on the matter.

Appeal Dismissal

However, O'Donnell dismissed the appeal this week, stating that he agrees with the appeal commissioner that sandwiches and hot drinks including tea and coffee fall under the sixth schedule of the 1972 Act and are therefore taxable at 13.5%.

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