Courts to review Revenue claim of €1.64bn tax bill issued to Perrigo

3 Jun 2020271 Views

Image: © Pongvit/Stock.adobe.com

Pharma company Perrigo is taking the Revenue Commissioners to court over a tax bill of €1.64bn.

Revenue is set to appear in the High Court this week over a tax bill it issued to the US pharma company Perrigo.

The disputed bill amounts to €1.64bn. This makes it the second largest tax assessment in the history of the State, behind the €13bn ruling made by the European Commission against Apple.

Revenue alleges that Perrigo underpaid tax from its purchase of Irish drug company Elan in 2013, and Elan’s sale of multiple sclerosis drug Tysabri to Biogen eight months prior.

Biogen paid for Tysabri with the inclusion of an up-front sum and a promise of future royalties on sales. As a result, Revenue claims that this deal should have been treated as a capital gain, making it eligible for the 33pc tax rate.

Support Silicon Republic

However, Perrigo classed the deal as tradable income with a tax rate of 12.5pc. Perrigo claims that this was consistent with how Elan reported the purchase and sale of intellectual property rights for more than 20 years.

‘A judicial fight’

Perrigo chief executive, Murray Kessler, has said that the claim made by Revenue and the Irish Government “violated our legitimate expectations to rely on prior audit and 20 years of history”.

He added: “So we are in a judicial fight first to see if it is even legal to assess the tax, not whether the tax is wrong.”

Speaking with The Irish Times, US tax expert Bob Willens said that even if Perrigo does not succeed in its challenge, it is possible that a settlement with Revenue could be agreed. This could mean that Perrigo would pay between only 10pc and 15pc of the €1.64bn claim.

Although Perrigo is registered in Ireland and has an office in Dublin, it does not manufacture any medication here and most of its sales come from the US. In April, the company reported that net sales had increased 14.2pc year-on-year to $1.34bn in the first quarter, beating analyst expectations of $1.32bn.

Colm Gorey is a senior journalist with Siliconrepublic.com

editorial@siliconrepublic.com