Tax Appeals Commission determination 135TACD2021 regarding CGT, 2021

Administrative Decision Number135TACD2021
Year2021
Date21 September 2021
Subject MatterCGT
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

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