The Irish tax authority Revenue Commissioners has issued a Notice of Amended Assessment (NoA) to Perrigo stating the company owes €1.64bn in tax from 2013 intellectual property sales by Elan Pharma, which was later acquired by Perrigo.
The notice states that Elan’s sales of intellectual property, including multiple sclerosis drug Tysabri, to Biogen Idec were classified as trading income, when they should have been treated as chargeable gains. Therefore, the sales were only subject to a 12.5% tax rate, rather than the necessary 33%, and the outstanding amount should be taxed for the 2013 financial year.
Perrigo responded to the notice by filing a report to the US Securities and Exchange Commission (SEC); the company is listed on the New York Stock Exchange, but is headquartered in Dublin, Ireland.
In the SEC filing, the company stated it ‘strongly disagrees with this assessment and believes that the NoA is without merit and incorrect as a matter of law’ and ‘will timely file an appeal with the Irish Tax Appeals Commission’; the deadline for an appeal is 28 December 2018.
The company goes on to say: “Perrigo strongly disagrees with both the basis on which Elan Pharma has been assessed and the methodology used to calculate the amount set out in the NoA. Perrigo firmly believes that the NoA is without merit and that Irish Revenue’s position is incorrect as a matter of law.
“Perrigo also believes that, based on applicable case law, Irish Revenue’s published guidance on what constitutes a trade for Irish tax purposes, and related published precedents, Elan Pharma’s tax returns were filed correctly.”
The €1.64bn amount does not include any interest or penalties associated with the tax assessment. This is believed this is the largest tax demand issued by the Revenue Commissioners in Ireland.