Irish holding company of US multinational wins €45m tax battle with Revenue

Unnamed group was overcharged by the tax authority, Tax Appeals Commission finds

An Irish-based holding company for a New York Stock Exchange-listed manufacturing firm has won a €45.03 million tax battle with Revenue concerning a disputed VAT bill.

The Tax Appeals Commission (TAC) found the unnamed company was overcharged €45 million by Revenue and has ordered that the tax assessments be reduced accordingly.

The global business has revenues in excess of €1 billion. Tax appeals commissioner Mark O’Mahony made the ruling after finding as the company here was fully engaged in economic activity at all times material to the appeal, it follows that the firm is entitled to a full deduction in respect of the VAT it incurred on the cost of the services.

Mr O’Mahony found that the holding company “is entitled to succeed in all aspects of this appeal”.

The ruling – running to 172 pages – states that the TAC has been requested to state a case for the opinion of the High Court in relation to its determination.

Mr O’Mahony made the ruling after hearing evidence over nine days in March 2019.

Mr O’Mahony recorded that it was the NYSE-listed parent of the appellant entity which became Irish tax resident by moving its central management and control to the State.

The business globally records 55 per cent of its revenues in the US, with the remaining 45 per cent outside the US.

Revenue submitted that the holding company was engaged in both economic activity and non-economic activity at the same time.

In an audit, Revenue determined that partial VAT recovery was allowable by the company in respect of ongoing costs, but that none of the VAT inputs arising from two transactions was considered to be recoverable.

However, Mr O’Mahony said he did not believe that the evidence in the appeal supported a finding that the firm was engaged in non-economic activity.

Mr O’Mahony further found that the appellant was not just a passive holding company but was instead at all material times actively engaged and directly and indirectly involved in the management of its subsidiaries and sub-subsidiaries.

Gordon Deegan

Gordon Deegan

Gordon Deegan is a contributor to The Irish Times