Bread sold by fast food chain Subway can’t be legally defined as bread because it contains too much sugar, according to a ruling by Ireland’s highest court.

The Supreme Court ruled against Bookfinders Ltd, a Subway franchisee based near Galway, in a long-running tax dispute about its bread and a host of products.

Bookfinders had argued that some of its takeaway food and drink — such as teas, coffees and heated sandwiches — were not liable for Ireland’s value-added tax. Bread is considered a “staple food” in Ireland and not subject to VAT – but it must meet certain criteria.

The court tossed out Bookfinders’ appeal because of the sugar.

“There is no dispute that the bread supplied by Subway in its heated sandwiches has a sugar content of 10 per cent of the weight of the flour included in the dough, and thus exceeds the 2 per cent specified,” the ruling from the five judges read.

The judgment said Irish law drew a distinction between “bread as a staple food” and other bakery items, “which are, or approach, confectionery or fancy baked goods”.

Under Ireland’s VAT Act of 1972, ingredients such as sugar and fat cannot exceed 2 per cent of the weight of the flour in bread dough.

The Bookfinders case stems from a 2006 decision by Ireland’s tax authority to refuse the franchisee’s request for a refund on 2004-2005 VAT payments.

After an appeal commissioner upheld the authority’s first refusal, Bookfinders took its case to the High Court. It lost there, and pushed ont to the Court of Appeal, where it was also unsuccessful.

After this week’s final ruling, a spokesperson said: “Subway’s bread is, of course, bread.

“We have been baking fresh bread in our stores for more than three decades and our guests return each day for sandwiches made on bread that smells as good as it tastes.”

The Irish ruling comes several years after an earlier controversy about Subway’s bread. In 2014, after a wave of bad publicity sparked by a food blogger, the company said it would remove azodicarbonamide – the so-called “yoga mat” chemical – from its rolls.

Azodicarbonamide is used to whiten flour and improve the condition of dough. It is also used to make vinyl foam products such as yoga mats and carpet underlay.

Subway has stopped using the chemical, but the US Food and Drug Administration is yet to completely ban its use in produce.

-with agencies