Does Green Reit buyer have tax-back case?

Commission’s determination on Abbvie case must have piqued Henderson Park’s interest

A Green Reit sign at a former development site at Molesworth and Dawson Street in Dublin. Photograph: Cyril Byrne

A Green Reit sign at a former development site at Molesworth and Dawson Street in Dublin. Photograph: Cyril Byrne

 

Abbvie, the US pharmaceuticals giant landed with a €500 million-plus Irish tax bill last year as it was caught in the crossfire of a crackdown on a certain type of takeover, must be mightily glad it has won an appeal.

Surely it’s only a matter of time before the real target – the purchaser of Green Reit – demands a refund.

The Irish Tax Appeals Commission published its determination on the Abbvie case on its website last week in a heavily-redacted document that did not name the appellant.

Abbvie’s surprise tax bill resulted from a move by Minister for Finance Paschal Donohoe in October 2019 to slap a 1 per cent stamp duty on so-called scheme of arrangement takeover structures, which involve the company being acquired cancelling its existing shares and issuing new stock to the acquirer.

This type of deal – used routinely in takeover deals involving Irish public limited companies – previously avoided stamp duty.

Liability

The budget measure was clearly aimed at Green Reit’s €1.34 billion sale to UK real estate investment firm Henderson Park, which was in the works at the time. However, Abbvie was caught as it was using a similar structure to take over Dublin-based Allergan.

Henderson Park’s woes were compounded as Donohoe removed some of the capital gains tax (CGT) relief for real-estate investment trusts (Reits) if they are taken off the stock market – like Green Reit – within 15 years of floating. Henderson Park’s combined stamp duty and CGT liability was estimated at about €65 million.

The Tax Appeal Commission agreed with Abbvie’s argument the stamp duty bill amounted to a retroactive tax, which is not allowed, and that the key date was when Allergan agreed to be taken over. This predated Donohoe’s move – even though the deal was completed at a later date.

Henderson and the lawyers at A&L Goodbody, who advised it on the Green Reit deal, refused to be drawn on Monday, but the commission’s determination must have piqued their interest.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.