Billionaire businessman Denis O’Brien is challenging a bid to overturn a finding that he was not liable to pay nearly €57 million in tax in Ireland around the same time he started living in Portugal.

A Revenue appeals commissioner decided Mr O'Brien's permanent home in 2000/01 was Quinta de Lago, Almanscil, Portugal, and not Ireland. That meant he was not liable for capital gains tax (CGT) of €56.8 million on the €285 million he received for 5.7 million shares he owned in Esat Digifone when it was sold to British Telecom in 2000.

But the Inspector of Taxes was unhappy with the commissioner’s decision and the commissioner agreed to refer the matter to the High Court to determine whether he was wrong in law.

Ms Justice Mary Laffoy yesterday reserved her decision on the issue.

The court heard the case arose over the purchase, in 2000, by Mr O’Brien of 6 Raglan Road, Ballsbridge, one of a number of investment properties in Dublin 2 and Dublin 4 that he had acquired since the early 1990s. The seven-bedroom detached period house was bought through a company, Partenay Ltd.

The Revenue said that, although it accepted Mr O’Brien had moved with his family to Portugal in February 2000, he also had a permanent home available to him at that time in Raglan Road which, when he bought it, was habitable.

In view of that, the Revenue argued the Appeals commissioner should have gone on to decide whether his personal and economic interests were closer to Ireland than to Portugal, thereby making him tax liable him in accordance with the Ireland/Portugal Double Taxation Convention

Architectural experts
The court heard Mr O'Brien employed a number of architectural and building experts to show the Raglan Road house was not habitable at the time and needed extensive renovation not completed until 2002. A builder and an engineer said parts of the house were dangerous.

Mr O’Brien argued that all the family’s personal possessions were re-located to Portugal after they left their former home in Wellington Road in February 2000 which was immediately rented out and no longer available to the family.

The Appeals commissioner, Ronan Kelly, found Mr O’Brien and his family did not reside there prior to the tax year 2000/01, that he had never put his mark or stamp on the property and it was not therefore his permanent home.

Anthony Collins SC, for the Inspector of Taxes, said Mr O’Brien bought the house from restaurateur and property developer Peter White, and his wife Laetitia, who received calls from three or four estate agents in 1999 asking if they were interested in selling as they had a client very anxious to buy.

Terms agreed
While they had no intention at the time to do so, terms were eventually agreed between them and Mr O'Brien.

The sale closed in May 2000 and refurbishment works began in January 2001. From February 2002, the O’Brien family used it during visits to Ireland until it was vacated by them in March 2003, the Appeals commissioner was told.

Investment
In his evidence to the commissioner's hearing in July 2003, Mr O'Brien said he bought Raglan Road primarily as an investment but with the option to use it as a family home if the family decided to return to Ireland.

Mrs O’Brien told the hearing her home was in Portugal, that two of her children go to school there and all her “stuff” – sentimental family items including photos and wedding presents – was in Portugal.

The previous owners of Raglan Road, the Whites, disputed evidence from Mr O’Brien’s architectural and engineering experts that the house was not in a good condition. As far as they were concerned, the house was extremely comfortable and not deficient in any way, they told the commissioner.