A very long legal battle on the tax liability of Kerry Co-op patronage shares ended this week as the High Court ruling on a legal challenge was published.

The Irish Farmers Journal has seen the ruling from Justice Emily Egan, the judge at the centre of the Kerry Co-op patronage share legal appeal, to uphold the ruling in favour of the co-op made in July 2020.

In recent months, 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.

We revealed in early June that our sources suggested the legal case result had upheld the previous ruling but it hadn’t been published.

It is now published and 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 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 has now won this test case taken by Galway dairy farmer Henry Walsh.

The judge concluded the tax commissioner was correct in the July 2020 published findings.

The result will not be appealed.