Perrigo mulls over appeal path to pursue on €1.64bn tax bill

US pharma giant says it is disappointed by High Court judgment

Perrigo: “We remain confident that Irish Revenue is wrong on the merits of the case.” Photograph: Bloomberg via Getty

Perrigo: “We remain confident that Irish Revenue is wrong on the merits of the case.” Photograph: Bloomberg via Getty

 

Pharmaceutical company Perrigo said it would assess whether or not to appeal a High Court ruling upholding a €1.64 billion Irish tax assessment or proceed with a separate case before a tax appeals commissioner.

The Irish-headquartered company had sought to have the tax demand – linked to its 2013 takeover of Irish pharma group Elan and the sale of Elan’s multiple sclerosis drug Tysabri – quashed.

However, the High Court found that Perrigo had failed to establish any basis to interfere with the assessment.

Perrigo said in a statement that no payment was required as a result of the ruling. If the High Court ruling is not appealed, the matter is due to go before a tax appeals commissioner.

Perrigo chief executive Murray Kessler expressed disappointment at the ruling but insisted a number of avenues were still open to the company.

“We continue to feel strongly that Elan Pharma, predecessor to Perrigo, had a legitimate expectation that Irish Revenue would not retrospectively, uniquely and without warning, recharacterise Perrigo’s trade and issue an assessment in this manner,” he said.

Revenue’s assessment

“While we are disappointed the judge did not see it this way, this judicial challenge and decision related to the process of whether Irish Revenue should have been allowed to issue the tax assessment; it did not address the merits of the case.”

Mr Kessler said its High Court case was just one pathway available to the company to obtain relief.

Speaking on a conference call to investors, he said: “We remain confident that Irish Revenue is wrong on the merits of the case.”

“Perrigo will now either appeal the decision or move on to challenge the merits of the assessment before the Tax Appeals Commission, ” he said.

“Perrigo will continue to vigorously defend its position on behalf of shareholders and the company remains focused on its consumer self-care transformation,” he said.

Tysabri sale

The tax bill served on Perrigo relates to the sale by Elan of its interests in multiple sclerosis drug Tysabri in 2013 to Biogen for an upfront payment of $3.25 billion and also a share of future royalties.

The dispute centres on Revenue’s decision, following a 2016 audit, to characterise Elan’s sale as a capital transaction, eligible to be taxed at a rate of 33 per cent.

The company maintains that the cash received was declared as trading income, taxable at 12.5 per cent.

Perrigo has appealed the assessment to the Tax Appeals Commission and the High Court has ruled it will be up to the commission to decide if the deal was a capital or trading transaction.

The €1.64 billion tax assessment is the second-largest in Irish history after the Apple case.

Perrigo is an international pharma company that does the bulk of its business in the US. When it bought Elan in 2013, it moved its headquarters to Ireland, largely as a way to cut its tax bill.