The Irish Farmers Journal understands that the judge at the centre of the Kerry Co-op patronage share legal appeal has ruled to uphold the ruling in favour of the co-op made in July 2020.

In recent weeks, the High Court has heard the legal case put forward by Revenue on a point of law following a ruling in favour of the co-op not to classify patronage shares as eligible for income tax made in July 2020.

Speaking to sources close the legal case this week, it is understood that the High Court has upheld the previous ruling and the result will be published in the coming days.

If confirmed, the ruling will mean patronage shares are not classed as income and hence are not eligible for income tax.

The Revenue Commission lodged an appeal against the ruling issued by the Tax Appeals Commission, which stated that patronage shares (shares issued for trading) issued by Kerry Co-op to milk suppliers would not be subject to income tax.

Background

After several years of deliberating, the Tax Appeals Commission wrote to Kerry Co-op in the summer of 2020 to inform the co-op that it had ruled that patronage shares issued by Kerry Co-op to milk suppliers would not be subject to income tax.

Over 3,000 Kerry milk suppliers were potentially facing an income tax bill in excess of €20m because of Revenue’s stance on the tax treatment of patronage shares issued to farmers in 2011, 2012 and 2013.

Kerry Co-op appealed the initial ruling with a legal test case and, ultimately, it will now have won if this is upheld.

Kerry Co-op resolution withdrawn

As published this week, the Irish Farmers Journal understands that Kerry Co-op has pulled back from presenting a resolution that was going to be proposed at the upcoming Kerry Co-op AGM on 21 June.

The resolution was developed last year followed on from reported bidding on the Kerry Group dairy business by the co-op board without member approval.

However, legal opinion just received by the board suggests if the resolution was proposed, it would cede power from the board to some shareholders, but not all shareholders. Hence, it has withdrawn the resolution.