A firm that supplies components to the automotive industry has lost a combined €3.38 million corporation tax and dividend withholding tax battle with the Revenue Commissioners.
The main issue between the firm and Revenue was the company paying a cumulative €14 million to employee benefit trusts which the company claimed was part of an overall strategy to reward and incentivise employees. The company recorded cumulative gross profits of €28.2 million from 2010 to 2014 but was able to reduce its corporation tax bill by paying €14 million in ‘pension costs’ to the EBTs.
Revenue further argued that the deduction claimed by the appellant firm in respect of the purchase of the EBTs is denied for corporation tax purposes, on the basis that no deduction is allowable in computing the profits of a trade in respect of a distribution.