The Court of Appeal has dismissed a challenge by Susquehanna companies seeking group tax relief in Ireland on the basis of their US ownership structure.
The dispute concerned claims made for 2010 and 2011 by Susquehanna International Securities Limited and Susquehanna International Group Limited. Their ultimate corporate parent, Susquehanna International Holdings LLC, is a Delaware limited liability company managed and controlled in the United States.
The difficulty was its tax status. Under US federal tax law, the LLC was a "disregarded entity" and did not itself file or pay income tax. Its income passed through a chain of fiscally transparent entities and was ultimately taxed in the hands of five US-resident individuals.
Revenue refused group relief under section 411 of the Taxes Consolidation Act 1997. The Tax Appeals Commission subsequently found in favour of the taxpayers, but the High Court overturned that determination in 2024.
The Court of Appeal has now upheld the High Court.
Mr Justice Allen said the Ireland-US Double Taxation Treaty protects enterprises owned or controlled by residents of the other contracting state, but the treaty defines such residence by reference to being "liable to tax" there. SIH LLC was not itself liable to US tax in the relevant years. The fact that its income was ultimately taxed in the hands of its owners did not make the LLC itself liable to tax.
The court also rejected the argument that this amounted to prohibited discrimination. It found that the different treatment arose from the parent company's fiscal transparency, not from the US residence of its owners.
The judgment distinguished a Canadian case, TD Securities, which had extended treaty benefits to a US LLC. The Irish court said that decision depended heavily on Canadian and US treaty practice and on different evidence about how the income was taxed.
The appeal was dismissed and the High Court order affirmed. Revenue was provisionally entitled to the costs of the appeal, subject to further submissions if the taxpayers sought a different order.