Court ruling saves Denis O’Brien €57 million in tax

Billionaire businessman Denis O’Brien today won a battle with Revenue that saves him paying nearly €57 million in Capital Gains Tax.

Ms Justice Mary Laffoy agreed in the High Court with the decision of a Revenue Appeals Commissioner that Mr O'Brien's permanent home in the tax year 2000/2001 was Quinta de Lago, Almanscil, Portugal, and not Ireland.

“Having regard to the evidence given and the facts found by the appeals commissioner, he was correct in holding that 6 Raglan Road, Ballsbridge, Dublin 4, was not a permanent home available to the appellant for the tax year 2000/2001 for the purposes of Article 4.2 of the Ireland/Portugal Double Taxation Convention,” the judge said.

Mr O'Brien, who had been represented by senior counsel Dermot Gleeson, was also awarded costs of the High Court proceedings but Judge Laffoy granted a stay on her costs order to facilitate consideration by Revenue of an appeal to the Supreme Court.

Judge Laffoy said the appeals commissioner was correct in finding 6 Raglan Road was not Mr O’Brien’s home because there was no personal link between him and the house, although ownership and possession of it had been acquired by him through a company he controlled as an investment.

She said that even if 6 Raglan Road was his home, it was not a permanent home within the meaning of Article 4.2 of the Double Taxation Convention.

Judge Laffoy said the facts as found by the appeals commissioner were contradictory to there having been any intention by Mr O’Brien that No 6 would be used, or kept available for his permanent use. The appeals commissioner also found Mr O’Brien did not regard the premises as suitable for his family when it was acquired.

The judge said Mr O'Brien had not arranged to have 6 Raglan Road available to him at all times. On the contrary his company, Parteney Limited through which he bought it as an investment had commissioned works which rendered No 6 unavailable for residential use at any time from June 2000 to February 2002.

The High Court proceedings arose out of a decision by the Revenue appeals commissioner Ronan Kelly, that Mr O'Brien's home was in Portugal and not Ireland which meant he was not liable for capital gains tax of €56.8million on €285million he received for his shares in Esat Digifone when it was sold to British Telecom in 2000.

The inspector of taxes had been unhappy with that decision and the appeals commissioner agreed to refer the matter to the High Court to determine whether he was wrong in law. Today the High Court held that he was correct in his finding.

The court heard Mr O’Brien bought 6 Raglan Road, one of a number of Dublin 2 and Dublin 4 investment properties he had built up since the early 1990s. It is a seven-bedroom detached period house.

The Revenue argued that even though it accepted Mr O’Brien moved with his family to Portugal in February 2000 he also had a permanent home available to him at that time in Raglan Road which, when he bought it, was habitable.

In view of this, the Revenue claimed, Mr Kelly should have gone on to decide whether Mr O’Brien’s personal and economic interests were closer to Ireland than to Portugal, which could have made him tax liable in Ireland in accordance with the Ireland/Portugal Taxation Convention.

A number of architectural and building experts considered the property in need of extensive renovation, which was not completed until 2002. A builder and an engineer said parts of the house were dangerous at the time.

Judge Laffoy said the reasoning underlying the propositions advanced on behalf of the inspector of taxes were fundamentally flawed. The inspector’s legal team had argued that once Mr O’Brien had acquired the property as a habitable dwelling the state which he caused it to be put into subsequently did not alter the fact that it was his to be used as a permanent home.

They also argued that the fact refurbishment work initiated at Mr O’Brien’s direction had progressively rendered No 6 uninhabitable during 2000/2001 had not meant it ceased to be a permanent home available to him in Ireland.

The judge said the court was satisfied the appeals commissioner had not adopted a wrong or mistaken view of the law, nor had he drawn inferences which no reasonable appeals commissioner would have arrived at.