Revenue tells court it was entitled to raise €1.64bn tax assessment against Perrigo

Tax collector maintains Perrigo owes the money because of its 2013 purchase of Elan

The Revenue Commissioners has disputed claims it had no entitlement to raise a €1.64 billion tax assessment against drug company Perrigo.

That amended assessment in 2018 did not breach Perrigo’s legitimate expectation, was not unfair and did not involve any abuse of power, Revenue maintained.

A statement of opposition by Revenue was outlined to the High Court on Friday in the continuing challenge by Irish-headquartered Perrigo over the assessment.

The case is being heard via video-link before Mr Justice Denis McDonald.


Revenue maintains Perrigo owes the €1.64 billion because of its purchase of Irish pharma group Elan in 2013 and the sale by Elan eight months previously of its multiple sclerosis drugTysabri to Biogen, its partner in the drug's development.

Perrigo bought Elan in 2013 by way of corporate inversion, which involves foreign companies reversing themselves into Irish businesses to secure an Irish domicile and a lower corporate tax rate.

Because Biogen paid for Tysabri with an upfront sum and the promise of future royalties depending on sales, Revenue says it should have been treated as a capital gain, taxable at 33 per cent.

Perrigo treated it as tradable income in its Irish tax return, subject to a 12.5 per cent tax rate, and maintains this is consistent with how Elan reported the purchase and sale of intellectual property (IP) rights to medicines over two decades without challenge by Revenue.

Legitimate expectation

It says the Revenue treatment of Elan’s returns over years meant Perrigo had a “legitimate expectation” as a taxpayer it should be able to account for the Tysabri sale as trading income.

During his continued opening of the case on Friday, Paul Sreenan SC opened a series of documents, including the Revenue statement of opposition.

In that, Revenue said a Shannon Free Trade Area tax certificate, issued in 2002 to Elan and backdated to 1997, only remained in force until the end of 2005 and thus had no relevance to the disposal of Tysabri in 2013 which gave rise to the assessment of 2018.

That assessment related to the period ended December 2013, was made within the applicable four-year limitation period, and has been appealed by Perrigo to the Tax Appeals Commission, Revenue said.

It said Perrigo appeared to suggest that, because of the Shannon certificate, it only carried on relevant trading operations and the Tysabri disposal must have formed part of those.

The issue of relevant trading operations ceased to have any consequence from the end of 2005 when the Shannon certificate expired and, at all times thereafter, the rate of 12.5 per cent applied to trading profits.

It is noteworthy, during the years Elan held the Shannon certificate, 1997 to 2005, the only year in which a corporation tax liability arose was 1998 when the sum of €643,858 was declared and paid by it.

‘Disagreed entirely’

The Revenue “disagreed entirely” with Perrigo’s suggestion the Tysabri disposal was a “relevant trading operation” as defined in the Shannon certificate and contended it was a capital disposal.

Elan was in a loss-making situation during most of the periods before 2013 so no “detailed interrogation” of its tax returns occurred, Revenue said.

The fact Revenue did not make an assessment for the periods before 2013 did not amount to a representation the applicant had applied appropriate tax treatment, it said.

Such a suggestion would undermine the operation of the self-assessment tax regime, it said. That regime, rather than providing Revenue accepts the truth of tax declarations, provides for strict time limits curtailing Revenue’s entitlement to challenge tax returns after a four year limit.

The case continues on Monday.

Mary Carolan

Mary Carolan

Mary Carolan is the Legal Affairs Correspondent of the Irish Times