Settlement of Irish Revenue’s largest tax assessment

Irish Revenue and Perrigo have agreed a settlement of the dispute that concerned what was reportedly the largest assessment issued by Irish Revenue. A&L Goodbody represented Perrigo in its appeal before the Irish Tax Appeals Commission.
 
The assessment concerned the tax treatment of the proceeds of sale by Elan in 2013 of intellectual property rights to a pharmaceutical product for the treatment of multiple sclerosis called Tysabri. 
 
Perrigo acquired Elan soon after the 2013 transaction and took on the tax consequences of the transaction. The High Court first examined the issuance of the amended assessment and ruled that Revenue had the right to issue the amended assessment but left over to the Tax Appeals Commission the question of whether Perrigo or Revenue was correct on the tax treatment of the proceeds of the 2013 transaction.
 
Perrigo treated the proceeds arising from the disposal of rights relating to Tysabri as trading receipts subject to Irish corporation tax at the trading rate of 12.5%. Revenue on the other hand contended that the 2013 transaction involved the disposal of a capital asset that should have been taxed as a chargeable gain and subject to the applicable rate of 33%. 
 
The dispute has been the subject of considerable interest since Revenue issued the assessment in late 2018. The fact that the matter has been settled in advance of the hearing before the Tax Appeals Commission means that there will be no formal determination of the disputed issue on whether the 2013 disposal was a trading transaction or a capital transaction. 
 
If you have any questions in relation to this or contentious tax matters generally, please contact Paul Fahy, Enda Hurley or any member of our Tax Disputes & Enquiries group.

Date published: 4 October 2021