The High Court has dismissed the Revenue Commissioners’ appeal over whether the sale of shares in motorway operator Eurolink was liable to Irish capital gains tax. It upheld the Appeal Commissioner’s conclusion that the shares did not derive their value directly or indirectly from land in the State.
The case concerned Cintra Infraestructuras Internacional SLU, a Spanish-resident company that held a majority stake in Eurolink Motorway Operations Limited until 2016. Eurolink operated under a 30-year public-private partnership contract with the National Roads Authority, later Transport Infrastructure Ireland, for the M4/M6 Kinnegad to Kilcock motorway. The road and its land remained owned by or vested in the roads authority. Eurolink had contractual access to carry out the project, including operating and maintaining the road and collecting tolls.
Revenue assessed Cintra for just over €868,000 in capital gains tax on an alleged €2.6 million gain from the share sale. The Appeal Commissioner allowed Cintra’s appeal in 2021, finding that the company was outside the Irish capital gains tax charge. Revenue then asked the High Court to decide legal questions in a case stated under section 949AQ of the Taxes Consolidation Act 1997.
The court considered whether “land in the State” in section 29 included Eurolink’s contractual access rights, and whether the value of its shares came from land. It held that, for this provision, “land” includes freehold and leasehold estates and lesser proprietary interests, but not contractual rights over land that are not coupled with an estate or interest. The court also rejected Revenue’s argument that the statutory definition of “lease” as including a licence extended the definition of land to cover such licences.
The judge found that the PPP contract granted Eurolink a limited, non-exclusive licence for the purposes of the project. Its access rights could not be assigned independently of the contract, and assignment of the contract required TII’s consent. The obligation to pay rates under the contract did not establish a proprietary interest in the land.
Eurolink’s share value reflected its contractual entitlement to retain a portion of tolls collected under the agreement. The court held that the public’s use of the motorway was too remote to mean the shares derived value indirectly from land. It did not decide that a proprietary interest is required in every possible case of indirect value from land.
The High Court answered “yes” to all six questions posed by the Appeal Commissioner and dismissed Revenue’s appeal. The judgment records that, if the transaction was outside the charge, withholding tax already paid would be repaid to Cintra; it does not make a separate repayment order in its conclusion.