Irish High Court ruling saves Denis O'Brien €57 million in tax

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Irish High Court ruling saves Denis O'Brien €57 million in tax

fotoflexer-photoirishrevenue.jpg

On September 6 2013 the High Court in Dublin upheld an appeal commissioner's decision in favour of Irish businessman, Denis O'Brien. The appeal commissioner had ruled that O'Brien was not liable to pay more than €57 million ($79 million) in capital gains tax (CGT) arising on the sale of loan notes in BT Hawthorn Limited in December 2000 and on the disposal of certain other assets during the 2000/2001 tax year.

The case, O’Brien (Appellant) v Quigley Inspector of Taxes (Respondent), centred on the issue of whether O'Brien had a permanent home available in Ireland for the tax year 2000/2001. This hinged on the interpretation of article 4(2)(a) of the Ireland-Portugal double taxation agreement (DTA). The High Court found in favour of O'Brien, concluding that the appeal commissioner was correct in determining that O'Brien did not have a permanent home in Ireland within the meaning of article 4(2)(a) of the DTA.

Sale of loan notes

In October 2002 the Revenue Commissioners (Revenue) raised an assessment, indicating that O'Brien was liable to pay CGT of more than €57 million relating to the proceeds received for the sale of loan notes in BT Hawthorn Limited in 2000, as well as other assets disposed of during the 2000/2001 tax year.

O'Brien appealed this assessment to the appeal commissioner who found in favour of the taxpayer, ruling that he did not have a permanent home available to him in Ireland in the tax year 2000/2001. Revenue subsequently requested the Appeal Commissioner to state a case for the opinion of the High Court.

The High Court was asked to determine whether having regard to the evidence given and the facts found, the appeal commissioner was correct in holding that O'Brien did not have a permanent home available to him in Ireland for the tax year 2000/2001 for the purposes of the DTA.

Permanent home available

The crux of the case turned on whether Mr O'Brien had a "permanent home available" to him in Ireland. This is considered in tie-breaker situations to determine which of the two contracting states the individual should be considered resident in for the purposes of the DTA.

Revenue argued that O'Brien had a permanent home available to him in Ireland and as such argued that the appeal commissioner should have gone on to consider the next rung of the test in article 4(2), that is, whether his personal and economic relations were closer to Ireland or Portugal.

As the concept of permanent home available is not defined in the DTA, the court heard differing interpretations of article 4(2), drawn from commentary surrounding this article, notably the OECD Commentary and Vogel on Double Taxation Conventions.

Decision of the court

The court stated that a residential property could not be a permanent home available to the individual without being occupied as this was at variance with OECD Commentary which sets out the requirement that the individual must have arranged and retained the accommodation for his permanent use.

The High Court also held that Revenue was incorrect in arguing that a home can be "available" without ever being actually availed of and that it is the availability of the premises, and its capacity to be used as a residence, which suffices to bring it within the concept of the permanent home available test. The High Court said that this ignored OECD Commentary and Vogel's analysis that it must be available "at all times continuously".

The High Court found that the appeal commissioner was correct in finding that:

  • The property was not O'Brien's home within the meaning of article 4(2)(a), because there was no element of personal link whatsoever between O'Brien and the accommodation.

  • Even if the property was O'Brien's home, it was not a permanent home within the meaning of article 4(2)(a). The facts as found by the appeal commissioner were contradictory to there having been any intention on O'Brien's part that the premises would be used, or kept available for his permanent use. And O'Brien did not regard the premises as suitable for his family, when they were acquired.

  • As a matter of fact, O'Brien had not arranged to have the property available to him at all times continuously and works had been commissioned which rendered the premises unavailable for residential use at any time from June 2000 to February 2002.

The High Court was satisfied that, in making the determination he made, the appeal commissioner did not adopt a wrong or mistaken view of the law, nor did he draw inferences which no reasonable appeal commissioner would arrive at.

Solicitors for Denis O'Brien: William Fry Solicitors; Solicitors for Revenue: Revenue Solicitors

Martin Phelan (martin.phelan@williiamfry.ie), William Fry Tax Advisors





more across site & shared bottom lb ros

More from across our site

The threat of 50% tariffs on Brazilian goods coincides with new Brazilian legal powers to adopt retaliatory economic measures, local experts tell ITR
The country’s chancellor appears to have backtracked from previous pillar two scepticism; in other news, Donald Trump threatened Russia with 100% tariffs
In its latest G20 update, the OECD also revealed tense discussions with the US where the ‘significant threat’ of Section 899 was highlighted
The tax agency has increased compliance yield from wealthy individuals but cannot identify how much tax is paid by UK billionaires, the committee also claimed
Saffery cautioned that documentation requirements in new government proposals must be limited if medium-sized companies are not exempted from TP
The global minimum tax deal is not viable without US participation, Friedrich Merz has argued
Section 899 of the ‘one big beautiful’ bill would have spelled disaster for many international investors into the US, but following its shelving, attention turns to the fate of the OECD’s pillars
DLA Piper’s co-head of tax for the US and Latin America tells ITR about her fervent belief in equal access to the law, loving yoga, and paternal inspirations
Tax expert Craig Hillier agrees with the comparison of pillar two to using a sledgehammer to crack a nut
The amount is reported to be up 57% from the £5.6bn that the UK tax agency believes was underpaid in the previous year
Gift this article