The High Court has ruled against pharmaceutical company Perrigo in its challenge to a tax assessment of almost €1.64 billion by Revenue.

Mr Justice Denis McDonald ruled that Perrigo, in judicial review proceedings, had failed to establish any basis to interfere with the Revenue assessment.

The dispute centred on the 2013 sale to Biogen of Perrigo’s remaining 50% interest in the intellectual property relating to the drug Tysabri, which is used to treat multiple sclerosis and Crohn’s disease.

A capital rather than trading transaction

After an audit of corporation tax returns, Revenue decided that the deal should have been treated as a capital rather than a trading transaction, attracting a 33% tax rate rather than 12.5% under section 78 of the Taxes Consolidation Act 1997.

Perrigo has appealed the assessment to the Tax Appeal Commission (TAC), but argued in court that the appeal should not have to proceed, and that Revenue had no legal entitlement to issue the assessment.

Mr Justice McDonald said his judgment dealt only with issues raised in the court proceedings, and that the issue would ultimately be resolved by the TAC.

Legitimate expectation

Perrigo had argued that it had a “legitimate expectation” that Revenue would not treat the profits from the Tysabri sale as a capital gain based on its dealings with the tax body over previous years.

But the judge rejected this contention, saying Perrigo had “failed to establish that there is anything in the course of dealing between the parties which would make it unfair in the present case for the Revenue to exercise its statutory powers under the 1997 act to issue an amended assessment”.