The tax dispute concerning Perrigo has been the subject of considerable interest since 2018, when Perrigo was assessed for tax in the sum of €1,636,047,645.00. This is reportedly the largest tax assessment ever made in Ireland. It arose from an audit of the corporation tax returns of Perrigo for the periods 2012 and 2013. Revenue contend that a transaction (involving the disposal of intellectual property rights in Tysabri) which had been treated as part of the trade of Perrigo in its corporation tax returns should properly have been treated as a capital transaction. A capital transaction would attract tax at an effective rate of 33% rather than the 12.5% rate applicable to trading transactions.  Perrigo contends that the Revenue is incorrect in characterising the sale as a capital transaction and has appealed the notice of amended assessment to the Tax Appeal Commission (“the TAC”) 

The TAC case is due to be heard in November 2021. However, in 2020, Perrigo brought an appeal to the Irish High Court, contesting the right of Revenue to even raise the tax assessment, based, primarily, on the argument that it had a legitimate expectation that trading treatment would be adopted. The High Court ruled that Perrigo failed to establish any basis to interfere with the assessment. Although the decision provided insight into Perrigo's relationship with the Revenue Commissioners, it left the question as to whether the disposal of Tysabri constituted a trading or a capital transaction to be resolved before the TAC.

On Tuesday, 11 May, the Perrigo chief executive, Murray Kessler, is reported to have told analysts on a conference call that discussions with Revenue were ongoing, in advance of the TAC,  and Perrigo had submitted an offer to settle the dispute. However, by 12 May, in an SEC filing, Perrigo confirmed that an Irish Revenue official had verbally confirmed that the offer would not be accepted. 

The possibility of a Revenue settlement prior to the TAC is not surprising. Given the amount at stake, Irish Revenue and any taxpayer would both be expected to review their position and seek to reach a satisfactory outcome, rather than risk prolonged, and uncertain litigation. Irish Revenue is empowered to reach settlements with taxpayers and does so on a routine basis. A series of reports, prepared by the Office of the Comptroller and Auditor General provides some insight into the settlement process. In particular, it highlights settlements in cases of technical complexity and cases with a high degree of risk where there is a difference between the estimate of liability and the settlement amount proposed. It is clear that Revenue closely scrutinise their position before agreeing to settlement, frequently receiving expert external opinions on the matters. The results of high-value cases are approved at the most senior levels. 

It is almost certain that, given the public nature of the dispute, the amounts involved and the complexity of the case, the Perrigo litigation will be subject to such internal Revenue review. However, it is perfectly normal that such settlement discussions occur and Perrigo has said that it expects further discussions and correspondence with Irish Revenue prior to the TAC hearing in November.