Tax Appeals Commission determination 75TACD2021 regarding CGT, 2021

• Administrative Decision Number: 75TACD2021
• Date: 18 February 2021
• Subject Matter: CGT
• Respondent: THE REVENUE COMMISSIONERS

75TACD2021

Between/

Appellant

-and-

THE REVENUE COMMISSIONERS

Respondent

DETERMINATION

A. Introduction

1. This appeal is against an assessment to capital gains tax (hereinafter referred to

as “‘CGT’”) for the year 2016 issued by the Respondent on the 11th of October 2016

in the sum of €868,388 in respect of alleged chargeable gains of €2,631,479. The

core issue in the appeal is whether

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(hereinafter referred to as the “Appellant”) as a non-resident company was

within the charge to CGT in respect of the chargeable gains assessed. The gains

assessed were alleged to arise in relation to the disposal by the Appellant on the

of February 2016 of shares in Ltd

(hereinafter referred to as “COMPANY A”).

B. Facts relevant to the Appeal

2. A Statement of Facts was prepared by the Appellant and submitted to the Tax

Appeals Commission (hereinafter referred to as the “Commission”). It was not

formally agreed by the Respondent but there is little dispute between the parties

in relation to the facts central to the determination of the appeal.

3. The Statement of Facts prepared by the Appellant records that the Appellant is a

incorporated and tax resident company which, until the of F

2016, held beneficially 66% of the shares in COMPANY A, an Irish incorporated

and tax resident company. The principal activity of COMPANY A is that of

designing, building, maintaining, operating and financing the

Motorway (hereinafter referred to as the "Motorway") and operating the

toll on behalf of Transport Infrastructure Ireland (hereinafter referred to as

"TII"). The TII is the body formerly known as the National Roads Authority

(hereinafter referred to as the “NRA”)

4. On the , COMPANY A entered into a contract by way of public-

private partnership agreement with TII in respect of the Road project

(hereinafter referred to as the "PPP Contract"). The PPP Contract obliged

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COMPANY A to design, construct, finance, operate and maintain the Motorway.

The Appellant submits that the PPP Contract did not confer upon COMPANY A any

proprietary interest in the Motorway or in the land on which the Motorway is

built, and the Respondent accepts that this is correct as a matter of property law.

At all times ownership of the land and the Motorway remained with TII. Pursuant

to the terms of the PPP Contract, COMPANY A was granted a licence to perform

its functions under the PPP Contract.

5. COMPANY A is a service company which was appointed to perform obligations

under the PPP Contract in return for which it received certain milestone payments

in respect of the construction and operation of the Motorway, and also had the

right to collect the tolls on behalf of TII and retain a portion collected under the

Toll Scheme. The term of the concession granted under the PPP Contract was

years.

6. COMPANY A operated and continues to operate under the supervision of TII and

has significant reporting requirements to TII. The PPP Contract set out strict

deadlines for delivery of the project and also in respect of the standards of work

delivered in respect of the Motorway. TII had and continues to have considerable

supervisory duties and powers, and ultimately has rights to step in should

COMPANY A fail to perform its obligations under the PPP Contract.

7. Pursuant to the powers under the Roads Act 1993, a draft Toll Scheme in respect

of the Motorway was adopted and was appended at Schedule of the PPP

Contract. The final scheme was adopted by TII on the

(hereinafter referred to as the "Toll Scheme"). The Toll Scheme specifically

provided that TII, in accordance with section 63 of the Roads Act, could enter into

an agreement with a third party concessionaire in respect of the collection of tolls