Ireland’s American business community was strangely quiet yesterday. And it was not entirely because they were keeping close tabs on the see-saw count in the US presidential election. There was also a pressing local issue.
Perrigo, a relatively low-profile over the counter medications firm, has found itself in the spotlight over how it accounted for the tax treatment of intellectual property (IP) for a multiple sclerosis drug, Tysabri, sold by Irish pharma Elan months before Perrigo bought the company.
It said the sale was normal business and applied a 12.5 per cent corporation tax rate; the Revenue Commissioners argue it should be seen as a capital gain, taxed at 33 per cent. At issue is a Revenue bill for €1.64 billion, the second largest assessment levied in Ireland to date.
The onshoring of IP in Ireland by US multinationals has been a key element in the surge of corporation tax receipts for the exchequer. Any ruling that might affect IP and how it is treated is a matter of significant concern for industry.
That was evident in the disquiet shown at the Government move to change the rules overnight on budget day to shut down a perceived loophole in Ireland’s arrangements on IP and capital allowances.
The High Court has dismissed Perrigo's judicial review, which essentially argued it was being treated unfairly and that Revenue was acting ultra vires.
No-one from the US corporate community was offering a view on Tuesday. Alongside the company itself, they will take time to digest the full implications of the ruling.
With the possibility of a court appeal and the likelihood of an eventual reactivation of a separate process before a tax appeal commissioner, it will be some time before the final word is handed down.