Ryanair is appealing the decision of the Revenue Commission to deny the company a VAT refund on the professional fees they incurred while attempting to gain a 100% shareholding in Aer Lingus.
The Revenue Commission, Circuit Court and High Court stating that these fees are not eligible for a VAT refund, as acquiring shares in other companies is not a ‘core economic activity’ of the airline.
Under VAT law, it is required that there is a ‘direct and immediate link’ between the activity the VAT is being claimed on, and the core activity of the airline, which was not the case for Ryanair.
Ultimately, Ryanair failed to get a 100% shareholding in Aer Lingus due to resistance by the Government and trade union shareholders, in addition to prohibitory conditions imposed by the EU Competition Authority.
Yesterday, Martin Hayden, counsel for Ryanair, argued before the High Court that Ryanair had provided adequate evidence that it intended to fully partake in Aer Lingus by carrying out management services for the company and should therefore be granted a VAT refund.
While certain European and High Court decisions found that mere intention to carry on ‘VATable activity’ was sufficient to secure a deduction, Justice Mary Laffoy reserved her decision.