Louis Fitzgerald loses €400,000 tax dispute with Revenue

The owner of some of Ireland’s best-known pubs including Kehoe’s and the Stag’s Head in Dublin has lost out on a seven-year, €400,000 tax dispute with the Revenue Commissioners.

The Court of Appeal has ruled that Louis Fitzgerald is liable to pay a combined €400,000 domicile levy for the years 2011 and 2010.

The written judgment, delivered by Ms Justice Caroline Costello, upholds a 2021 High Court judgment which found that Mr Fitzgerald was liable for the €400,000.

Mr Fitzgerald is the owner of one of the largest hospitality groups in the country and some of the other businesses in the Louis Fitzgerald Group include Bruxelles, the Gin Palace, Grand Central and Quays Temple Bar along with An Poitín Stil, the Arlington Hotel and the Louis Fitzgerald Hotel.

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The case initially came before the High Court after Mr Fitzgerald appealed a 2020 ruling by the Tax Appeals Commission that the domicile levy assessment of €400,000 by Revenue in 2015 should stand.

The domicile levy of €200,000 is payable by any person who is domiciled in Ireland and whose worldwide income exceeds €1 million, whose Irish property is greater in value than €5 million and whose income tax liability for the year was less than €200,000.

Mr Fitzgerald stated that he incurred capital expenditure of €25.2 million on the construction of the Louis Fitzgerald hotel at Newlands Cross and €14.6 million on plant and machinery and in 2010 and 2011 the hotel was loss-making.

Mr Fitzgerald availed of the losses in respect of his hotel trade and applied for an income tax refund for €361,346 in respect of 2010 and €919,557 in respect of 2011.

In 2013, Revenue processed the claims but retained €400,000 in domicile levy after finding that Mr Fitzgerald was subject to the levy for 2010 and 2011.

Mr Fitzgerald argued that he was not liable for the domicile levy as his “worldwide income” was nil and accordingly, he was not a “relevant individual” for the purposes of the domicile levy.

Mr Fitzgerald also argued that the losses that he incurred in his hotel trade reduced the level of the income under each of his other sources of income.

Mr Fitzgerald also argued that as he paid €209,281 in Universal Social Charge (USC) for 2011, the domicile levy should not apply for that year.

In the Court of Appeal ruling, Ms Justice Costello found that Mr Fitzgerald was “a relevant individual” for the years 2010 and 2011 and was liable to pay the full domicile levy for each of the years. She found that trading losses are not deductible in arriving at worldwide income for domicile levy purposes.

The judge also rejected Mr Fitzgerald’s argument that USC was an income tax as it was a charge on his income.

She found further that “the USC is a tax on income, but it is not and does not thereby become income tax and the liability to pay USC is not a liability to income tax”.

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She stated that it follows that Mr Fitzgerald was a relevant individual for the year 2011 as his liability to income tax was less than €200,000 and thus he came within the definition.

She said: “His payment of USC in excess of €200,000 did not take him outside the definition and it was not a payment of income tax.”

The judge said that her preliminary view on legal costs is that Mr Fitzgerald was liable for the costs of Revenue in the case.

She also said that if Mr Fitzgerald wished to contend this he may request a short hearing within 14 days of the delivery of the judgment and submit a written submission with Revenue for it to respond with its own written submission.