In December 2000, businessman Denis O'Brien completed a share deal, which involved Esat Telecom and BT, that benefited him by €284,830,824. Revenue worked out that on this transaction, and some others, he was due to pay total tax of €57,848,753.
However, Mr O'Brien pointed out that he'd moved to Portugal and wasn't liable to Irish tax on this transaction. He'd bought a site there in 1996 and built a house on the site in 1998. In February 2000, 10 months before the conclusion of the share deal, he and his family moved to Quinta de Lago, Almanscil.
Revenue didn't dispute that Mr O'Brien was resident in Portugal for tax purposes. It argued, however, that Mr O'Brien was "a resident of both Ireland and Portugal for the purposes of" the relevant tax laws.
Now, it had to establish that there was a house somewhere in Ireland that was available to Mr O'Brien as a residence. The house in which the O'Brien family had lived for some years was at 77 Wellington Road, Ballsbridge, Dublin, 4. There was no dispute that the O'Briens moved out of there in February 2000, and that the house had subsequently been let. Therefore, it wasn't available to Mr O'Brien as a residence.
Mr O'Brien had been buying property for some time, for investment. An O'Brien company called Parteney had bought a house at 6 Raglan Road, Ballsbridge, from Peter White and Laetitia White, in May 2000, for €7.1m. Mr O'Brien regarded the house as an investment, with a possible use as a residence some time in the future. Revenue decided that this house was available to Mr O'Brien as a residence in 2000, and thus made him liable to tax on the €284m transaction.
Mr O'Brien's lawyers appealed this decision to an Appeal Commissioner, Ronan Kelly, in 2003. Mr Kelly found in favour of Mr O'Brien and this was appealed to the High Court, where Ms Justice Mary Laffoy presided. She last week endorsed the Appeal Commissioner's finding in favour of Mr O'Brien.
To a large extent, the case revolved around the condition of the house on Raglan Road, and also on the definition of a home. Peter and Laetitia White had bought the Raglan Road house in 1985 and had spent a lot of money improving it. However, Mr O'Brien's lawyers outlined how their client found the house unsuitable for living in and had not done so. An Aga cooker and kitchen units had not been part of the sale and had been removed. A number of experts gave evidence on the condition of the house.
Mr O'Brien's wife gave evidence that her home was in Portugal and that was where she lived. Judge Laffoy summarised Mrs O'Brien's evidence to the Appeal Commissioner, saying her "stuff" (meaning her and her family members' personal belongings) was in Portugal and that was where her home was. Her two children were going to school in Portugal.
The family photographs, wedding album, CDs and DVDs, the children's toys and the clothes that they outgrew were in Portugal, along with Mr O'Brien's books and business files. When Mrs O'Brien's "friends wrote to her they wrote to her address in Portugal".
The Appeal Commissioner, Ronan Kelly, was satisfied that the Raglan Road property "was acquired by the appellant for investment purposes and with the idea that it might be used as a family home in the future".
He found that, "the notion of 'home' in the context of the 'permanent home available' test is a residential premises 'upon which people have put their own stamp and where they have lived for some time and where they had their 'stuff'".
Mr Kelly found that the O'Briens had not resided in 6 Raglan Road at any time prior to the end of the tax year 2000/2001. He was satisfied that the appellant "did not make his mark or put his stamp on" the premises during the period in question.
Works were being carried out to 6 Raglan Road from June 2000 to the end of 2001 and, therefore, Mr Kelly concluded, the premises were not "a home of the appellant either before or during the tax year 2000/2001". Therefore, it could not be said that the appellant had "a permanent home available to him" at 6 Raglan Road in that period.
Because of the absence of kitchen units and equipment in May 2000, the opening-up works between June 2000 and September 2000 and the contract works which commenced in January 2001, he was satisfied that the house could not reasonably be regarded as "available" in the sense of a "permanent home available" to the appellant during the tax year 2000/2001.
Judge Laffoy found that Revenue's concentration on the fact that Raglan Road was bought by an O'Brien company, and that he thus had total control over the house, was "wholly misconceived".
The judge concluded that Mr O'Brien "undoubtedly had a residential property available to him which he could deal with in any way he wished. If he so wished, he could have refurbished it and let it, or refurbished it and sold it, or, alternatively, re-sold it in the condition in which it was when it was acquired. What he did not have was a 'permanent home' within the meaning of" the relevant tax law.
Judge Laffoy concluded: "Having regard to the evidence given and the facts found by the Appeal Commissioner, he was correct in holding that 6 Raglan Road, Ballsbridge, Dublin 4, was not a permanent home available to the appellant for the tax year 2000/2001 for the purposes of Article 4.2 of the Ireland/Portugal Double Taxation Convention."