An Irish registered pharma company has launched a High Court challenge aimed at overturning a €1.6 billion corporation tax demand by the Revenue Commissioners.
The action has been taken by Perrigo Pharma International Designated Activity Company (DAC) arising out of a Notice of Amended Assessment for the year 2013, which altered the amount of tax the Revenue claims is due from the company.
The firm's proceedings are against Inspector of Taxes, The Revenue Commissioners, the Minister for Finance and Ireland and the Attorney General.
The company at the time of the issue in dispute between the parties was known as Elan Pharma International Ltd.
The amended assessment related to the the sale in 2013 by Elan of its interest in the intellectual property for the MS drug Tysabri.
That deal was initially taxed as trading income at 12.5%, but Revenue after reassessing the transaction said it have been treated as a chargeable gain, which is subject to a higher tax rate.
Perrigo bought Elan eight months after it had sold the Tysabri Intellectual Property.
At the High Court today, Paul Sreenan SC for Perrigo said his client strongly disputes the amended assessment, which was issued late last November.
Counsel said the company had conducted its business in Ireland for many years on foot of a certificate from the Minister in Fianance, under the 1997 Taxes Consolidation Act, entitling it to a 10% rate of Corporation Tax.
That tax rate was increased from 10% to 12.5% in 2005. Counsel said his client had a legitimate expectation that the sale of intellectual property would attract the same corporate tax it had been paying for almost 20 years.
However Revenue in October said the IP sales transactions, including the sale of Tysabri was not part of Perrigo's trade and should have been treated as chargeable gains subject to an effective 33% tax rate rather than the 12.5% rate.
As a result, the firm seeks an order quashing the amended assessment issued by the Inspector of Taxes on the company for the period January 1 2013 to December 31, 2013.
The firm also seeks declarations from the court including that the amended assessment is so unfair that it amounts to an abuse of power, is in breach of Perrigo's legitimate expectation and constitutes an unjust attack on and an interference with the firm's constitutional rights to property.
The application for judicial review came before Mr Justice Seamus Noonan. The judge said he was satisfied, on an ex parte basis, to grant the firm permission to bring its challenge.
The Judge adjourned the case to a date in April and put a stay on the company's appeal against the assessment which is pending before the Tax Appeals Commission until the High Court case has been determined.