Tax Appeals Commission determination 135TACD2021 regarding CGT, 2021

• Administrative Decision Number: 135TACD2021
• Date: 21 September 2021
• Subject Matter: CGT
• Respondent: THE REVENUE COMMISSIONERS

135TACD2021

BETWEEN/

Appellant

-and-

THE REVENUE COMMISSIONERS

Respondent

DETERMINATION

[1] This is an appeal against an Amended Notice of Assessment to Capital Gains Tax

for the year 2010 dated 1 December 2015. The net amount chargeable to tax is €30,688,342.

The capital gains tax @ 25% is €7,672,085. A Notice of Appeal dated 22 December 2015

was submitted on behalf of the Appellant.

Facts

[2] On 2010, disposed of shares in

. was a Maltese tax resident company incorporated on

in Cyprus. was an Irish tax resident trading company.

At the date of disposal, the Appellant owned 100% of the shares in and

the business of consisted wholly or mainly of the carrying on of a

trade.

2

[3] The Appellant is an Irish domiciled individual who was tax resident and ordinarily

resident in Ireland in the year at issue.

[4] The shares in were allotted to for €5,000.

The shares were legally owned by from the date of issue in

to the date of disposal in 2010.

[5] disposed of the shares in to

for initial consideration of €21,111,855. The agreed

consideration also included a deferred contingent element in the form of an earn-out. The

earn-out received by was €7,969,402. The total consideration received

by for the disposal of the shares was €29,081,257.

[6] The shares in were not specified assets under section 29(3)

of the Taxes Consolidation Act, 1997.

[7] held over 5% of the issued share capital of

for a continuous 12 month period ending in the previous 24 months prior to disposal.

[8] , as a non-resident company, was not within the charge to Irish

capital gains tax nor within the charge to Irish corporation tax on chargeable gains in

respect of the disposal of the shares in .

[9] An Amended Notice of Assessment to Capital Gains Tax issued to increase the

chargeable gain in 2010 by €29,076,257 to €30,799,777. The increase of €29,076,257 was

the sum of the initial consideration of €21,111,855 plus the earn-out of €7,969,402 less the

base cost of the shares of €5,000.

3

Legislation

[10] Section 28 of the Taxes Consolidation Act, 1997 provides:

“28 Taxation of capital gains and rate of charge

(1) Capital gains tax shall be charged in accordance with the Capital Gains Tax Acts

in respect of capital gains, that is, in respect of chargeable gains computed in

accordance with those Acts and accruing to a person on the disposal of assets.

(2) Capital gains tax shall be assessed and charged for years of assessment in respect

of chargeable gains accruing in those years.

(3) Except where otherwise provided by the Capital Gains Tax Acts, the rate of capital

gains tax in respect of a chargeable gain accruing to a person on the disposal of

an asset shall be 25 per cent, and any reference in those Acts to the rate specified

in this section shall be construed accordingly.”

[11] Section 29(3) of the Taxes Consolidation Act, 1997 provides:

“29 Persons chargeable

…

(3) Subject to any exceptions in the Capital Gains Tax Acts, a person who is neither

resident nor ordinarily resident in the State shall be chargeable to capital gains tax

for a year of assessment in respect of chargeable gains accruing to such person in

that year on the disposal of –

(a) land in the State,

(b) minerals in the State or any rights, interests or other assets in relation to

mining or minerals or the searching for minerals,

(c) assets situated in the State which at or before the time when the chargeable

gains accrued were used in or for the purposes of a trade carried on by such

person in the State through a branch or agency, or which at or before that