High Court allows Revenue appeal on foreign royalty withholding tax deductibility and calculation errors.

THE HIGH COURT

IN THE MATTER OF A CASE STATED PURSUANT TO

SECTION 949AQ TAXES CONSOLIDATION ACT 1997 AS AMENDED

[2026] IEHC 305

Record No. 2024/340R

BETWEEN

ACCENTURE GLOBAL SOLUTIONS LIMITED

RESPONDENT/APPELLANT

AND

THE REVENUE COMMISSIONERS

APPELLANT/RESPONDENT

JUDGMENT of Ms Justice Marguerite Bolger dated the 12th day of May 2026

1. This is an appeal by the Revenue Commissioners by way of case stated against a determination of the Tax Appeals Commission of 27 June 2024 concerning the tax treatment of foreign royalty withholding tax (“FWHT”) incurred by Accenture Global Solutions Limited (“Accenture”), an Irish incorporated and Irish tax-resident company, in the course of its international intellectual property licensing activities. Eleven questions of law have been referred for the opinion of this Court. For the reasons set out below, I find that all except the second question identify errors of law in the determination.

2. I will set out the background to this appeal, this Court’s jurisdiction on this type of case stated, the relevant statutory provisions and I will then consider the questions that have been referred.

Background

3. Accenture is a member of the Accenture PLC group and conducts its client-facing activities through local operating entities located in various foreign jurisdictions. Within the group structure, Accenture holds and centrally controls the group’s intellectual property (“IP”) assets. Its principal activities consist of developing, enhancing, maintaining, managing, protecting and exploiting those IP assets, and generating trading income by licensing the IP to the group’s operating entities.

4. During the relevant accounting periods, (“the relevant period”), Accenture granted IP rights to operating entities pursuant to Intellectual Property Licensing Agreements which enabled the operating entities to market, sell and deliver technology-based business solutions to customers within their respective territories under the Accenture group name. In consideration for the grant of IP rights under those agreements, the operating entities paid royalties to Accenture. Accenture did not operate through branches or permanent establishments in any of the foreign jurisdictions in which the operating entities were located during the relevant period. Local tax laws required the operating entities to withhold tax at source from the gross royalty amounts and to remit that tax to the relevant foreign tax authorities. The foreign withholding tax (“FWHT”) was therefore deducted from the royalty payments before remittance to Accenture and was applied to the gross amount of the royalty payable, irrespective of whether Accenture earned a profit or incurred a loss in respect of the underlying transaction.

5. The rate and mechanism of FWHT varies depending on the jurisdiction of the operating entity where it is charged. In some jurisdictions, including Argentina, withholding tax on royalties paid to non-residents was imposed by reference to a statutorily presumed net income, calculated as 90% of the gross royalty, and taxed at a corporate rate of 35%, yielding an effective withholding rate of 31.5%, applied irrespective of whether Accenture made an actual profit or loss on the transaction. In other jurisdictions, withholding tax was applied directly to the gross royalty at a rate of 10%. This was evidenced by invoices and withholding tax certificates before the Commission.

6. During the relevant period, Accenture was in a loss-making position for Irish corporation tax purposes and therefore paid no corporation tax in the State for those years. This meant that the statutory calculation under Schedule 24 of the Taxes Consolidation Act 1997 (“TCA 1997”) in respect of the FWHT suffered gave rise to a foreign tax credit of zero.

7. Accenture was entitled to claim credit relief under Schedule 24 TCA 1997 for the FWHT incurred during the relevant period but elected not to do so, as it was entitled to do. Instead, Accenture filed corporation tax returns for the relevant period claiming a deduction for the FWHT as a trading expense under section 81 TCA 1997 which, if allowed, would have increased the trading losses that could be carried forward to be set off against future liabilities or surrendered to other entities in the group. An Expression of Doubt was included in each return in respect of that treatment.

8. By determinations issued on 26 August 2021, 25 July 2022 and 18 July 2023, the Revenue Commissioners (“Revenue”) denied the deduction claimed on the basis that FWHT constituted a tax on income for which relief was governed exclusively by Schedule 24 TCA 1997 and was not deductible under section 81 TCA 1997. Accenture appealed those determinations to the Tax Appeals Commission pursuant to section 949I TCA 1997. A hearing of the appeals took place at which expert evidence was given. The central dispute concerned whether the FWHT suffered by Accenture on gross royalty income was deductible as a trading expense under section 81(2)(a) TCA 1997, or whether relief for such tax was confined exclusively to the credit and reduction mechanisms provided for under Schedule 24 TCA 1997.

9. Accenture’s case before the Commission was advanced on the basis that it was not seeking relief by way of foreign tax credit under Schedule 24 TCA 1997 but rather was claiming a deduction in computing its Irish trading profits so as to be taxed only on the amounts actually received after FWHT had been withheld. Revenue contended, by contrast, that FWHT was a tax on income for which the TCA 1997 made specific provision through Schedule 24 and related sections, and that section

81 TCA 1997 was unavailable as a mechanism to relieve such tax, even in circumstances where no effective credit could be obtained.

Tax Appeal Commissioner’s Determination

10. A determination issued in Accenture’s favour which made detailed findings of material fact, including findings concerning Accenture’s business model, the nature of the royalty income, how FWHT was imposed, and Accenture’s inability, due to its loss-making position, to obtain foreign tax credit relief for the relevant period. The Commissioner found as a fact that FWHT was imposed on Accenture’s gross royalty income and was suffered irrespective of whether Accenture generated a profit or a loss, and that it represented an economic cost of carrying on Accenture’s trade in the relevant jurisdictions. The Commissioner determined that, as a matter of characterisation, FWHT is properly regarded as a tax on income. However, it further determined that this characterisation did not, of itself, preclude the tax from being treated as a deductible expense under section 81 TCA 1997 in appropriate circumstances.

11. In addressing the relationship between Schedule 24 TCA 1997 and section 81 TCA 1997, the Commissioner held that Schedule 24 establishes a specific regime governing credit relief for foreign tax where credit “is to be allowed,” including an express prohibition on deductions in such circumstances. The Commissioner found that this prohibition did not apply where credit relief was not claimed or was unavailable. The Commissioner held that paragraph 10 of Schedule 24 TCA 1997 confers a statutory right to elect not to take credit relief, and that where such election is made, or where credit relief is not otherwise available, there is no absolute prohibition on considering the deductibility of FWHT under the general computational rules, including section 81 TCA 1997.

12. The Commissioner cited the jurisprudence on deductibility, including the principles articulated in Strong & Co v Woodifield [1906] AC 448 and subsequent authorities, and concluded that the FWHT suffered by Accenture was incurred in the course of earning income, prior to the ascertainment of profits, and represented a cost necessarily incurred in order to carry on its trade. The Commissioner rejected Revenue’s contention that FWHT constituted an application of profits or that its deductibility was precluded by the absence of volition or by the sequencing of the tax liability, finding that such considerations were not determinative under section 81 TCA 1997.

13. The Commissioner’s conclusions are summarised at para. 168 of the Determination as follows; "168. Accordingly, based on a consideration of the evidence and submissions together with a review of the facts and documentation, the Commissioner is satisfied that in circumstances where foreign RWHT suffered by the Appellant, cannot be credited under Schedule 24 TCA 1997, and which was applied to the gross income of the Appellant, the foreign RWHT suffered was an expense necessarily incurred by the Appellant in order to carry on its trade and is “wholly and exclusively laid out or expended for the purpose of the trade of the company”. The foreign RWHT suffered by the Appellant was an expense incurred in earning its profits and so should be deductible for Irish tax purposes under Section 81(2)(a) TCA 1997, as an expense wholly and exclusively incurred for the purposes of the business activity.”

14. The Commissioner determined that, for the relevant accounting periods, Accenture had established that the FWHT suffered, constituted an expense wholly and exclusively laid out for the purposes of its trade and was deductible under section 81(2)(a) TCA 1997. The Commissioner therefore allowed the appeals and determined that Revenue’s Notices of Determination denying the claimed deductions were incorrect.

15. This case stated is Revenue’s appeal from that determination.

The Commissioner’s finding of material facts

16. The Commissioner made a number of findings of fact, perhaps the most significant of which is as set out at para. 33.15. "33.15 “FWHT is in the nature of a tax on income.” The Commissioner did not specify whether this refers to gross or net income. The Commissioner also found at paras. 33.16, 33.17 and 33.18; "33.16 During the relevant period, and in light of its financial circumstances at that time, the Appellant was not in a position to avail of a credit pursuant to Schedule 24 TCA 1997, for foreign RWHT withheld on its royalty income.

33.17 During the relevant period, it was open to the Appellant to elect not to take a credit pursuant to Schedule 24 TCA 1997.

33.18 Foreign RWHT was a cost for the Appellant of doing business in the foreign jurisdictions and this was confirmed by the Respondent’s expert witness 1.”

Questions to this Court

17. The following questions have been stated to this court; "1. Was there no evidence whatever before the Commissioner to find, and/or did the Commissioner err in drawing inferences from the primary facts which no reasonable Commissioner could have drawn, in finding that: 1.1 the foreign RWHT must be incurred by the Appellant in order to earn or profit from the trade (Determination, §157); 1.2 the foreign RWHT was part and parcel of the Appellant’s business activity (Determination, §157); 1.3 the foreign RWHT was a foreseeable condition of earning income and gains (Determination, §157); 1.4 the Appellant could not conduct its trade without incurring the foreign RWHT (Determination, §157); 1.5 it was not possible for the Appellant to trade in the relevant jurisdictions imposing RWHT without incurring the imposition of RWHT (Determination, §158)?

2. Was there no evidence whatsoever before the Commissioner to find, and/or did the Commissioner err in drawing inferences from the primary facts which no reasonable Commissioner could have drawn, in finding that the foreign RWHT incurred by the Appellant in Argentina was imposed on gross royalties (Determination §27.4, §33.14, §156 and §159)?

3. Did the Commissioner err in law in determining that the Appellant is entitled to a deduction pursuant to section 81 TCA 1997 in relation to foreign RWHT suffered by the Appellant in the relevant jurisdictions?

4. Did the Commissioner err in law in determining that there is no general principle of law which specifically denies a deduction for taxes in accordance with the prescribed rules as set out pursuant to section 81 TCA 1997, where those taxes are not calculated after the ascertainment of profit?

5. Did the Commissioner err in her interpretation and application of the relevant case law to the facts in this case when determining deductibility of RWHT pursuant to section 81 TCA 1997?

6. Did the Commissioner err in placing reliance on compulsory deductions imposed on businesses which are permissible as a deduction pursuant to section 81 TCA 1997 such as Irish and Foreign stamp duty, Irish and foreign irrecoverable VAT, rates levied on commercial property, local authority charges and employer’s PRSI?

7. Did the Commissioner err in law in determining that a digital services tax (DST) is a “tax on income” and the possibility of Revenue allowing a deduction for DST under section 81 TCA 1997 demonstrated that there was no bar to deductions being claimed for taxes on income?

8. Did the Commissioner err in law in her interpretation of section 76A TCA 1997?

9. Did the Commissioner err in law in determining that, where a credit for foreign RWHT under Schedule 24 TCA 1997 is not allowable as the Appellant did not incur a liability to Irish Corporation Tax in the relevant period, the Appellant is not prohibited from claiming a deduction for foreign RWHT under section 81 TCA 1997?

10. Did the Commissioner err in law in her interpretation of the provisions of Schedule

24 TCA 1997 and section 77(6B) TCA 1997 insofar as she determined that the said provisions do not preclude a deduction being made under section 81 TCA 1997 in respect of foreign RWHT which does not qualify for relief under Schedule 24 TCA 1997 and/or section 77(6B) TCA 1997?

11. Did the Commissioner err in law in interpreting paragraphs 7 and 10 of Schedule 24 TCA 1997 as permitting a taxpayer to elect not to claim relief in respect of foreign RWHT under Schedule 24 TCA 1997 and section 77(6B) TCA 1997?”

Statutory provisions

Section 77(6B) TCA 1997 provides:

"(a) In this subsection –

“amount of the income referable to the relevant royalties” shall be construed in accordance with paragraph 9DB(1)(b)(ii) of Schedule 24; “relevant foreign tax” and “relevant royalties” have the same meanings, respectively, as in paragraph 9DB(1)(a) of Schedule 24

(b) Where, as respects an accounting period of a company, the trading income of a trade carried on by the company includes an amount of relevant royalties, the amount of the income referable to the relevant royalties shall be treated as reduced (where such a deduction cannot be made under, and is not forbidden by, any provision of the Income Tax Acts applied by the Corporation Tax Acts) by so much of the relevant foreign tax in relation to the relevant royalties as does not exceed that amount of the income referable to the relevant royalties.” Section 81(2)(a) TCA 1997 provides: "(2) Subject to the Tax Acts, in computing the amount of the profits or gains to be charged to tax under Case I or II of Schedule D, no sum shall be deducted in respect of—

(a) any disbursement or expenses, not being money wholly and exclusively laid out or expended for the purposes of the trade or profession;” Section 826 TCA 1997 provides:

"(1) Where –

(a) the Government by order declare that arrangements specified in the order have been made with the government of any territory outside the State in relation to –

(i) affording relief from double taxation in respect of –

(I) income tax,

(II) corporation tax in respect of income and chargeable

gains (or, in the case of arrangements made before

the enactment of the Corporation Tax Act 1976,

corporation profits tax),

(III) capital gains tax,

(IV) any taxes of a similar character,

imposed by the laws of the State or by the laws of that territory, and ……………………. then, subject to this section and to the extent provided for in this section, the arrangements shall, notwithstanding any enactment, have the force of law as if each such order were an Act of the Oireachtas on and from the date of (A) the insertion of Schedule 24A into this Act, or (B) the insertion of a reference to the order into Part 1 of Schedule 24A, whichever is the later …………………….

(2) Schedule 24 shall apply where arrangements which have the force of law by virtue of this section provide that tax payable under the laws of the territory concerned shall be allowed as a credit against tax payable in the State.” Section 826A TCA 1997 provides; “[w]here relief from double taxation is not afforded by virtue of section 826, relief (known as ‘unilateral relief’) from tax shall be given in respect of tax paid under the laws of a territory other than the State in accordance with Schedule 24.” Schedule 24 Section 7 provides; "7.(1) Where credit for foreign tax is to be allowed against any of the Irish taxes in respect of any income, this paragraph shall apply in relation to the computation for the purposes of income tax or corporation tax of the amount of that income.

(2) Where the income tax or corporation tax payable depends on the amount received in the State, that amount shall be treated as increased by the amount of the credit allowable against income tax or corporation tax, as the case may be.

(3) Where subparagraph (2) does not apply—

(a) no deduction shall be made for foreign tax (whether in respect of the same or any other income), and

(b) where the income includes a dividend and under the arrangements foreign tax not chargeable directly or by deduction in respect of the dividend is to be taken into account in considering whether any, and if so what, credit is to be allowed against the Irish taxes in respect of the dividend, the amount of the income shall be treated as increased by the amount of the foreign tax not so chargeable which is to be taken into account in computing the amount of the credit, but

(c) notwithstanding anything in clauses (a) and (b), where any part of the foreign tax in respect of the income (including any foreign tax which under clause (b) is to be treated as increasing the amount of the income) cannot be allowed as a credit against any of the Irish taxes, the amount of the income shall be treated as reduced by that part of that foreign tax.

(4) In relation to the computation of the total income of a person for the purpose of determining the rate mentioned in paragraph 5, subparagraphs (1) to (3) shall apply subject to the following modifications:

(a) for the reference in subparagraph (2) to the amount of the credit allowable against income tax there shall be substituted a reference to the amount of the foreign tax in respect of the income (in the case of a dividend, foreign tax not chargeable directly or by deduction in respect of the dividend being disregarded), and

(b) clauses (b) and (c) of subparagraph (3) shall not apply and, subject to those modifications, shall apply in relation to all income in the case of which credit is to be allowed for foreign tax under any arrangements. Schedule 24 Section 9 DB provides; "(4) Where as respects any relevant royalties received in an accounting period by a company, any part of the foreign tax cannot, due to an insufficiency of income, be treated as reducing income under paragraph 7(3)(c) or under section 77(6B), then the amount which cannot be so treated shall, for the purposes of this paragraph, be unrelieved foreign tax.”

This Court's jurisdiction on an appeal by way of case stated from the Tax Appeal Commissioner’s Determination

18. The Tax Appeals Commissioner is an expert administrative tribunal and is entitled to curial deference from this Court in relation to their findings of fact, which applies even where this Court may feel it would have reached a different decision on those facts. The deference owed is not, as pointed out by Murray J. in Stanberry Investments v Commissioner for Valuation [2020] IECA 33 at para. 52 “a supercharged presumption of validity”. Where inferences are drawn from facts that no reasonable decision maker could draw, they should be set aside. A finding that is unsupported by any evidence can be set aside.

19. The position was well summarised by Blaney J. in O’Culacháin v. McMullan Brothers Ltd [1995] 2 I.R. 217, endorsing the test set out by Kenny J. in Mara (Inspector of Taxes) v. Hummingbird [1993] ILRM 421 as follows: "(1) Findings of primary fact by the judge should not be disturbed unless there is no evidence to support them;

(2) Inferences from primary facts are mixed questions of fact and law;

(3) If the judge's conclusions show that he has adopted a wrong view of the law, they should be set aside;

(4) If his conclusions are not based on a mistaken view of the law, they should not be set aside unless the inferences which he drew were ones which no reasonable judge could draw;

(5) Some evidence might point to one conclusion, other evidence to the opposite: these were essentially matters of degree and the judge's conclusions should not be disturbed (even if the court did not agree with them, for it was not retrying the case) unless they were such that a reasonable judge could not have arrived at them or they were based on a mistaken view of the law” No curial deference is owed to the Commissioner on pure issues of law and so, a conclusion based on the wrong view of the law can and should be set aside. In Hade v Revenue Commissioners [2025] IEHC 385 Cahill J. correctly stated at para. 30 of her decision on a similar case stated from the Tax Appeal Commissioners that the judgment of the Court of Appeal in Stanberry “does not allow for any deference on questions of law, such as those presented in the case stated here.”

Statutory interpretation of taxing statutes

20. The interpretation of taxing statutes must, as with any statute, look to the words of the statute. “If the words used are plain and their meaning self-evident, then save for compelling reasons to be found within the instrument as a whole, the ordinary, basic and natural meaning of those words should prevail.” (as per McKechnie J. in Dunnes Stores v. Revenue Commissioners [2020] 3 I.R. 480). More recently the principles of statutory interpretation were summarised by Murray J. in Heather Hill Management Company CLG v. An Bord Pleanála [2022] 2 ILRM 313 as requiring the words to be viewed in context and purpose “viewed as part of a single continuum rather than as separated fields to be filled in, the second only arising for consideration if the first is inconclusive”. The principles of Heather Hill were applied to taxation statute by the Court of Appeal in Hanrahan v. Revenue Commissioners [2024] IECA 113 where, at para. 83, the Court of Appeal endorsed the High Court holding that “in interpreting taxation statutes generally context and purpose are relevant”.

21. Murray J. said in Heather Hill that in construing the words in context, the court would be guided by “various canons, maxims, principles and rules of interpretation, all of which will assist in elucidating the meaning to be attributed to the language”. Revenue argues that one of those maxims is generalia specialibus non derogant (a general provision does not derogate from a special one). Accenture contend that section 81 is excluded from the application of that maxim as it involves overlapping aims and applications. They rely on the decision of Cusack v. London Borough of Harrow [2013] UK 40 where Lord Neuberger found the relevant section was a specific provision contrasting with the more general provision and were, therefore, “simply different provisions concerned with overlapping aims and with overlapping applications”. Similar submissions were made by Accenture to the Commissioner, who referred extensively to the arguments paid by Accenture and by Revenue on statutory interpretation but ultimately, she did not attempt to resolve the disputed issues on statutory interpretation that were put to her by the parties.

Expert evidence given to the Tax Appeal Commissioners

22. The Commissioner found, inter alia, that (i) FWHT is in the nature of a tax on income (at para. 33.15 of her determination) and (ii) it was a condition for Accenture of doing business in the foreign jurisdiction, which she said had been confirmed by Revenue’s expert witness Professor Kirk.

23. Evidence was given on behalf of Accenture by Mr. Ryan Shanks. It was put to him by Counsel for Revenue that if Accenture had a branch in the country where FWHT is deducted from the royalty payments, there would have been no need to deduct the FWHT. Mr. Shanks confirmed (at page 153 of the transcript of evidence given to the Tax Appeal Commissioners) that he was unaware of that having been considered and that it would be a question for Accenture leadership. Professor Kirk (at page 247 of the transcript of evidence) agreed that FWHT not relieved under a double taxation agreement, becomes an irrecoverable tax charge. When asked if it was an irrecoverable cost, he said: “Well I suppose it’s a cost of doing business in that country, but that was the decision to go to that country.”

24. In his evidence (at page 218-9 of the transcript) Prof Kirk spoke about FWHT being charged on a “notional profit figure, if you like, in that the income has been earned abroad. Those countries that deduct withholding tax, do so for the reasons, for administration purposes, the only way they can get their hands on taxes to take it off turnover. And to my mind it is basically a form of income tax, which hopefully you’re able to recover through foreign tax treaties, double tax treaties. If you cannot, then unfortunately it's irrecoverable. So that's my opinion that it is basically a tax on notional profit, if you like, if not actual profit.” At page 238, he stated; “[I]f you had set up, as was mentioned earlier on, a branch, you would have expenses, you would have income in that country, you don't have any income or, sorry expenses in those countries and therefore your profit if your income, it is the same”. He went on to say “expenses in the various jurisdictions is zero. Because they haven't got a physical presence in those countries.” (at page 239). In his report at para. 4.3 Prof Kirk described FRWT as “in substance a tax on profits.”. At page 228 he agreed with the comment made by Accenture's expert, Mr. Boyle, that FWHT “is a proxy for what the entity would have paid had they had a physical presence in that country.” Prof. Kirk went on to explain (at page 228 of the transcript) “those foreign jurisdictions cannot get access to the profits that are earned because they don't have a physical presence in that country. They want to get a piece of the action in terms of taxation and so they use the gross income as the basis of getting to that tax. There is no other way they can do it. So I would agree with that comment that it is a proxy for what the entity would have paid had they a physical presence in that country.”

25. The Commissioner did not expressly find that FWHT was a proxy for what the entity would have paid had they a physical presence in that country but found that FWHT was a tax on income and was suffered by Accenture on its gross income.

Three issues

26. The eleven questions put to this Court by the Commissioner can be distilled into three issues and I will address them within that structure. Issue 1 from questions 9 to 11: The Interaction between Sections 77(6B), 81(2), 286 and 286A and Schedule 24

27. Revenue contend that Accenture could not claim a deduction for FWHT under section 81 because the Oireachtas has enacted a specific statutory regime providing for relief from FWHT. They rely on the maxim generalia specialibus non derogant in condemning the Commissioner for disregarding a specific legislative regime for the provision of relief from FWHT, contained in sections 77(6B), 826, 826A and Schedule 24 (hereinafter referred to as “the double taxation regime”) in favour of applying the general provision on the deductibility of trading expenses in section 81(2)(a). Revenue says this is contrary both to the maxim generalia specialibus non derogant and to the wording of section 81(2) which is expressly made “subject to the Tax Acts”. Accenture argues that Schedule 24 and section 81 are overlapping and not mutually exclusive and dispute any ambiguity in the words that might merit a contextual approach to their interpretation.

28. Section 826(1) permits Double Taxation Treaties with foreign jurisdictions which may allow an Irish taxpayer to claim FWHT as a credit against their Irish tax. The process and formulae for calculating credits for FWHT against a taxpayer’s Irish taxes are set out in Schedule 24. Schedule 24, paragraph 7(3) provides for the calculation of “the Irish measure” of the foreign income. The Irish measure cannot be reduced below zero i.e., a loss cannot be created. Further provision for relief is provided for by Schedule 24 paragraph 9 DB and at (4) which refers to “unrelieved foreign tax " thereby recognising that FWHT that cannot be relieved by an application of Schedule 24 (as occurred here) is unrelieved.

29. FWHT is, as found by the Commissioner, a tax on income. The DTT (Double Taxation Treaty) with Australia, which was opened to the Court as an example of a double taxation treaty, expressly refers in the heading to "taxes on income and capital gains" and says that Australian tax "shall be allowed as a credit against any Irish tax computed by reference to the same profits” [my emphasis]. Thus, if there is no Irish tax arising from the same profits, then there is no double taxation to relieve. If a double taxation treaty is in place, then section 826(1) applies. Otherwise, unilateral relief from double taxation, pursuant to section 826A, applies. That is the entirety of the statutory regime for double taxation between Ireland and a foreign jurisdiction.

30. It is common case here that Accenture was loss-making which brought the calculations pursuant to Schedule 24 to zero as they had no Irish tax against which to claim any credit. Understanding the consequences of this is central to the matter at issue here. The Commissioner used the word "hindered" in relation to the unavailability of a credit pursuant to Schedule 24 where, at paragraph 97 she stated; "97. However, the Commissioner is satisfied that the factual matrix herein is not dissimilar to the 2019, 2023 and 2024 Determinations, whereby the availability of a credit was hindered either by the nature of the tax incurred or the taxpayer’s financial circumstances, there being no profits for the purposes of corporation tax. As there was no blanket rule that denied the potential of a deduction in accordance with the section 81 TCA 1997, and the credit for foreign tax not being allowed against the Irish taxes chargeable in respect of any income (Paragraph 7(1)) in those appeals, the Appellants could avail of the general provisions of section 81(2) TCA 1997.” To say that Accenture was “hindered” in securing a credit for FWHT, suggests something unfair or incomplete in the application of their entitlements pursuant to Schedule 24. No such unfairness ever existed. All that happened was that Accenture did not qualify for relief pursuant to Schedule 24. The calculation established a zero credit, because Accenture, as a loss-making entity that was not paying any Irish tax against which the FWHT could be credited.

31. The Commissioner (with whom Accenture agrees) concluded at para. 162 of her determination that the fact there was no credit to be allowed under Schedule 24 did not prohibit Accenture from then moving to claim a deduction under section 81, i.e. that a deduction was not automatically prohibited. Revenue argued that this was incorrect as it says the only relief in respect of FWHT permitted by the Act is under the double taxation regime and that progressing from Schedule 24 to section 81 is, therefore, prohibited. Revenue relies on the wording at the beginning of section 81 (2) (a) "subject to the Tax Acts" i.e. that the deduction of a business expense is "subject to" any other provision of the Act and here, has no application because of the double taxation regime.

32. The Commissioner found that paragraph 10 of Schedule 24 provides a right of choice whether to take that double taxation credit and from that seemed to find that making that choice would remove the taxpayer from Schedule 24 and entitle them to claim under section 81. This approach fails to take account of the words in paragraph 10 "under the arrangements". Those “arrangements” are defined as those pursuant to section 826 (1), i.e. double taxation, thereby limiting paragraph 10 to that situation and not to the broader application found by the Commissioner. Paragraph 10 simply allows the taxpayer to elect not to take the section 826 credit otherwise accruing to them. It does not follow from being permitted to make that election, that the taxpayer is thereby permitted to progress to make a section 81 claim from having incurred a foreign tax for which double taxation relief is unavailable to them.

33. The Commissioner failed to consider the specific legislative provisions of section 826A which provides for relief in accordance with Schedule 24 where section 826 double taxation relief is not reported. Section 826A is mandatory ("shall be given"). That is the provision that applies where a paragraph 10 election is made, not a section 81 claim. Support for this approach is found in paragraph 9 2B (4) 4.2 (6) 6 of Schedule 24 which provides for another source of relief where there is an insufficiency of income. That situation did not arise here but the statutory provision for it supports the interpretation above that a move from Schedule 24 to a section 81 claim is not permitted by the wording of the Act, having regard to the context of those words and the purpose of the Act.

34. The wording in Schedule 24 referring to "shall apply" supports this being a stand-alone regime for double taxation relief and not something that may or may not apply alongside or as an alternative to a section 81 deduction claim.

35. Had Accenture chosen to license its IP through a permanent establishment in the jurisdiction where it was receiving royalty payments from its customers, that FWHT would not have been charged as the tax authorities in the foreign jurisdiction would have been able to secure a tax in the usual way in accordance with its own domestic tax laws. Accenture made a choice about how it was going to run its business, but like many choices, it had consequences, one of which was that Accenture, as a loss-making entity not paying Irish tax, did not qualify for Schedule 24 credit. Therefore, the FWHT it suffered became an irrecoverable tax that had been paid in another jurisdiction.

36. The intention of the Oireachtas was to enact a specific and limited arrangement to prevent the same income being taxed in Ireland and in the foreign jurisdiction whereby an Irish taxpayer could be relieved of their Irish tax obligations by reference to foreign tax that had been incurred. It was not intended, nor were these provisions enacted, to compensate a taxpayer for having suffered a tax liability abroad. To allow Accenture to move from a Schedule 24 claim for relief, where the calculation produced a zero amount of relief, to a claim for a section 81 deduction in respect of a trading loss, would move impermissibly beyond that clear legislative intent.

37. The double taxation statutory regime here was disregarded by the Commissioner in allowing Accenture to move from a Schedule 24 calculation that resulted in zero relief, to claim a section 81 deduction. Section 81 (2) is expressly made "subject to the tax Acts". That must have meaning. The maxim generalia specialibus non derogant cannot be rebutted here by Accenture's submission about overlapping provisions as they are not overlapping provisions but rather are both standing alone statutory regimes, one allowing for relief from double taxation and the other allowing for the deduction of a trading expense. As pointed out by Accenture (at paragraph 7.4.8 of its submissions) a deduction and credit are different forms of relief, but I do not accept Accenture's submission that the two mechanisms of relief overlap. They do not. They are both separate and distinct from each other, each fulfilling separate purposes and separate legislative intentions.

38. Double taxation relief is provided for in the Act by a carefully drafted regime that goes through various rules, variations on the rules and permutations for relevant calculations including the calculation of the Irish measure. To suggest that this is some sort of 'by the way' provision that overlaps with the different regime for claiming deductions i.e. trading expenses and section 81 (2) is to do a disservice to its detail and complexity that was put in place as the only statutory regime to allow for the specific and limited relief of tax paid in another country. Those limitations cannot be circumvented.

39. Accenture argued that the legislature had expressly overridden section 81 in other provisions, such as at sections 86 and 758. Those provisions refer to requirements of trademarks and expenses in obtaining a patent and were therefore required by section 81 (m) which exclude any sums paid in relation to the user of a patent. Neither do I accept the Commissioner’s or Accenture's reliance on Revenue’s Guidance, which is exactly what it says, guidance from Revenue. It is not binding on this court (and Accenture did not suggest it was) and cannot influence the task of this court in determining the meaning and effect of the statutory provisions having regard to the wording, context and purposes of the Act.

40. In conclusion on this issue raised by questions 9 to 11, the Commissioner erred in finding that Accenture were entitled to seek a section 81 deduction where no credit was available to them under Schedule 24. The general regime of section 81 is expressed to be subject to the Tax Acts.

41. The Act makes clear and specific provision for relief from double taxation, thereby rendering section 81 inapplicable in circumstances where Accenture’s Schedule 24 calculation yielded no relief. It is not, as Accenture argued, that Schedule 24 simply does not apply on the facts of this case (at paragraph 7.2.2 of its submission) and later at paragraph 7.3.11 that "where the relevant DTTs do not provide for credit in Accenture circumstances, that the credit provisions within Schedule 24 simply have no application." Rather it was that the calculations pursuant to the double taxation regime provided for by the Act came to zero, which meant that no relief was available. The FWHT was unrelieved because there was nothing to relieve. e statute regime was unavailable does not mean that the regime did not apply. Rather it means that its application to Accenture did not result in relief from double taxation in the particular circumstances of Accenture's business model.

42. The cost incurred by a taxpayer in suffering a deduction for FWHT abroad, can only be addressed by way of an application for relief from the double taxation regime. If a claim for double taxation is available but yields no relief, that is the end of the relief that the TCA allow from double taxation. The Oireachtas has put that statutory regime in place for relief from double taxation and a move from an application for that relief towards a claim for a deduction pursuant to section 81 is prohibited. The Commissioner fell into an error of law in permitting Accenture to progress making a section 81 claim for a deduction where its loss-making status prevented it obtaining double taxation relief. The Commissioner erred in stating at paragraph 164 (i) that Accenture could not avail of credit. The credit was to be allowed but it worked out at zero. The Commissioner was wrong in saying that the credit was not to be allowed for the same reason. The Commissioner also erred in saying at paragraph 164 (iii) because paragraph 10 does not permit a taxpayer to step outside the double taxation regime entirely; it merely permits an election as to the manner in which relief within that regime is computed. The election simply means that a taxpayer within Schedule 24 i.e. seeking relief from double taxation, can elect to be dealt with differently under section 77 (6B) and 9B of Schedule 24 as if it were unilateral relief.

Issue 2 from questions 3 to 7: Did the Commissioner err in allowing Accenture to claim FWHT as a deductible section 81 expense?

43. The Commissioner found that FWHT was a deductible expense as having been "wholly or exclusively laid out or expended for the purpose of the trade or profession" (as per section 81(2)(b). Accenture assert that the Commissioner's finding was a question of fact or an inference to be drawn from the facts. It is not that simple and the significant amount of case law on what is or is not a section 81 deductible expense cited to the Commissioner and to this court confirms the legal complexity of what is a question of law or at a minimum, a mixed question of law and fact.

44. The test to determine what comes within "for the purpose of the trade" has been formulated in different ways in the many binding Irish and other persuasive authorities on the issue. Lord Davies gave a pithy analysis in Strong v. Woodifield [1906] AC 448 at page 453 of “for the purposes of earning the profits." The Commissioner’s determination focused on "profits" but much less on Lord Davies’ reference to "earning". A description urged on this Court by Counsel for Revenue is that of Rowlatt J. in an earlier case when interpreting the Strong test, endorsed by Lord Simmonds in Smith's Potatoes Estate Ltd v. Boland (Inspector of Taxes) (1947) 30 T.C. 267 "unless the expenditure is at least intended to 'bring grist to the mill 'of the trade, it cannot be within the meaning of the rule be money laid out for the purpose of his trade." The idea of bringing grist to the mill of the trade is, like the Strong test, focused on earning the profits rather than the mere existence of profits. The correct legal test focuses on earning the profits, which is very different to focusing on the consequences of having earned a profit or on the application of those profits.

45. Application of the test requires consideration of what might come within "profits". Revenue’s expert witness, Professor Kirk, spoke about FWHT having been "a tax on a notional profit" (at pages

218 to 219 of the transcript of the evidence before the Tax Appeal Commissioners hearing) because the foreign jurisdiction cannot get access to the profits earned where Accenture do not have a physical presence in that country. The foreign jurisdiction "uses the gross income as the basis of getting to that tax. There is no other way they can do it." (at page 228 of the transcript). Professor Kirk went on to refer to Accenture having income in the foreign jurisdiction but no expenses because the expenses are in Ireland (at page 237 of the transcript). The following exchange then took place at pages 238 to 239 of the transcript: "A. Yes, but if you had set up, as was mentioned earlier, on, a branch, you would have expenses, you would have income in that country, you don't have any income or, sorry, expenses in those countries and therefore your profit is your income, it is the same.

Q. It's not. With respect, your profit is not the same as income. You are saying as matter of law that profit is the same as income?

A. It is in a situation where your expenses are zero.

Q. But the expenses are not zero. How are you saying in this instant the appellant--

A. Expenses in the various jurisdictions is zero. Because they haven't got a physical presence in those countries."

46. Accenture's expert took a similar approach in discussing net vs gross principles. At page

203 of the transcript, he said;

"and that gets me back to the net versus those principles. So I don't disagree that many practitioners hold the view that a foreign royalty withholding tax is a proxy for income tax. In my view that is not in itself determinative. It still needs to meet the substance of an income tax under the accounting rules. And in many cases, those deemed reductions may bear no resemblance to what the entity would actually pay if they had a physical presence in that country. So, whether certainly a judgment points on a scale by itself in my view it's not determinative."

47. The Commissioner treated royalty payments as gross income that was something entirely different to the concept of "profits". The expert witnesses’ evidence was that the royalty payments on which FWHT was charged before a calculation of how much of the payment was profit, included an element of profit (or according to Revenue’s expert, Prof Kirk, it was exclusively profit as there were no expenses). This evidence does not sit comfortably with the Commissioner’s focus on the gross nature of the royalty payments and her conclusion at paragraph 164(vi) of the Determination that there was “a nexus between the expense and the earning of profits for deductibility”.

The Commissioner’s Application of the Test

48. The Commissioner said (at paragraph 106 of her determination) that the test of deductibility is that it must be made for the purpose of earning the profits of the trade. She noted Accenture's submission that if a cost is incurred on the journey to profit, it is capable of being a deductible expense. The Commissioner went through the case law and emphasised the reference to the timing of the impugned deduction. At paragraph 121 of her determination, she referred to a key point in Harrods (Buenos Aires) Ltd v Taylor-Goodby (HM Inspector of Taxes) [1963] 41 T.C 450 as being when and how the tax was incurred, where Danckwarts L.J. held "if the expense has to be incurred for the purpose of earnings, profits, it is a direct expense; on the other hand if the payment of the expenses or charges is made after the profits have been ascertained, then the expense is not deductible, because it is simply an application of the profits which have been earned." The Commissioner's focus on the timing of the imposition of FWHT can also be seen in her discussion of the decision in Ashton Gas Company v AG [1906] AC 10 where the House of Lords refused to allow income tax to be deducted until the profits had been ascertained. Accenture had relied on Ashton Gas as authority for the proposition that tax applied to the ascertained profit of a trade is not deductible in ascertaining the profit itself. The Commissioner referred at paragraph 30.5 to the

decision of Inland Revenue Commissioners v. Dowdall O'Mahoney and Co Ltd [1952] A 401 as establishing, in accordance with the principle in Strong, that expenses which are viewed as an application of profits are not deductible. In Dowdall the House of Lords held that a UK company could not deduct income tax imposed in Ireland as an expense because it was a tax on profit and therefore not expended for the purposes of earning profit. The foreign taxes were not wholly and exclusively laid out for the purpose of the company's trade and therefore not deductible.

49. The Commissioner distinguished Ashton Gas and Dowdall O'Mahoney because both cases considered the deductibility of taxes after the profit was ascertained whereas in the appeal before her, a consideration was required of taxes imposed on gross receipts prior to the deduction of expenses and the ascertainment of profit (at paragraph 136 of her determination). I consider the

decision in Dowdall O'Mahoney to be far more relevant than the Commissioner seems to have, particularly in its analysis of the tax where Lord Oaksey held at page 409; “I am of the opinion that taxes such as those now in question, namely, income tax, corporation profits tax and excess profits tax, are not according to the authorities wholly and exclusively laid out for the purposes of the company's trade in the United Kingdom. Taxes such as these are not paid for the purpose of earning the profits of the trade : they are the application of those profits when made and not the less so that they are exacted by a dominion or foreign government”.

50. The fact the FWHT in the within case was imposed on gross receipts does not, itself, distinguish it from the decision in Dowdall v O'Mahoney or indeed Ashton - or remove the reasoning of both decisions from the authorities that should have been persuasive to the Commissioner.

51. The Commissioner, in focusing on the timing of the imposition of the tax, fell into an error of law in not appreciating or properly applying the overriding test of whether the expense was incurred in earning the profit or was an application of the profits which had been earned.

Harrods

52. The Commissioner found the decision in Harrods was relevant to what she had to determine and rejected Revenue’s argument that it was required to be distinguished on its facts (at para. 126 of the Determination). She accepted that the situation in Harrods where any failure to pay the substitute tax charged by the Argentinian authorities would have precluded the company from trading in Argentina, was similar to Accenture’s submission that it had no choice but to pay FWHT on the royalty payments (para. 127 of the Determination). I do not think that was correct. The substitute tax at issue in Harrods was charged on capital rather than on income or receipts, which renders it more akin to a tax such as rates which are clearly expended for the purpose of earning the profit, rather than the FWHT at issue here. Harrods had no option but to pay the tax in order to do business in Argentina, whereas Accenture had the option of opening a permanent establishment in the foreign jurisdiction. Accenture is of course free to decide how it will conduct its business but the consequences of its decision not to operate via an establishment in the jurisdiction in which it secured royalty payments, meant that FWHT was imposed on those payments and deducted from them before Accenture received them. Counsel for Accenture said this was a poor argument as tax is charged on what is done rather than what might be done. That is not the argument that was made. Rather Revenue was, quite properly, pointing out that FWHT was not an unavoidable cost of Accenture doing business abroad as the Commissioner had purported to find but rather was a cost that could have been avoided if Accenture had chosen to operate from permanent establishments in the jurisdictions that were imposing the FWHT on them.

53. Accenture submitted to this Court that the evidence of its two expert witnesses to the Commissioner was that the company could not conduct its trade without incurring FWHT. When the court asked to be directed to this evidence, it was directed to the evidence given by Accenture’s witnesses that FWHT was suffered on the gross amount. There was no evidence that Accenture could not conduct its trade without incurring FWHT. Neither could there have been, given Accenture’s option of operating through permanent establishments, which was accepted by Accenture before this Court as a proposition (at transcript day 2 page 55) albeit arising from a hypothetical situation.

54. The Commissioner misdirected herself in law as to the lack of any option for Harrods to trade in Argentina without incurring the substitution tax, which just did not apply here. This is not a case of this Court giving a different evaluation of the evidence than that of the Commissioner. There was, quite simply, no evidence given that Accenture could not conduct its trade without incurring FWHT. The Commissioner sought to justify her view that FWHT was deductible pursuant to section

81 by saying that otherwise Accenture “would be effectively suffering a tax on income that it never receives, which cannot be correct.” However, that can be and is correct as the FWHT is unrelieved tax that Accenture suffered because of its decision to license its IP in return for royalty payments in foreign jurisdiction where it has no permanent establishment against which local tax could be charged.

55. The Commissioner also laid emphasis on a decision of a Hong Kong Inland Revenue Board (Decision Case No. D43/91) which she found to be a case “on point” (at para. 138 of her determination). The Hong Kong Inland Revenue Board, a three-person panel chaired by a (then) QC, held that foreign taxes imposed on gross receipts were deductible expenses when calculating profits. The Inland Revenue Board found the tax was on turnover rather than on net income and determined that it “was an expense on the journey to ascertain profits” (as set out at para. 141 of the Commissioner’s determination). The Commissioner also cited, with apparent approval, previous decisions of the Tax Appeals Commissioners that had cited the decision of the Hong Kong Inland Revenue Board with apparent approval.

56. I decline to place a similar reliance on a decision of over 30 years ago of a Hong Kong Inland Revenue Board where this Court has little or no understanding of the law that was being applied by that Board and/or how it is or is not similar to the statutory provisions at issue here or, more significantly, the status of this Board in the relevant legal hierarchy.

57. I note the reliance placed by the Inland Revenue Board on the decision in Harrods which is understandable given the findings the Board made at para. 7 that “the taxpayer could not have gone on earning income without paying the foreign tax”. Unlike in the within case where the imposition of FWHT arose from Accenture's choice not to have a permanent establishment in the foreign jurisdiction, the Hong Kong taxpayer, like the tax payer in Harrods, had no choice but to incur the foreign tax in order to run their business.

58. In those circumstances if I am wrong in not affording the decision of the Hong Kong Board any persuasive value, then I distinguish it as involving a tax that was required to be paid in order to do business in that jurisdiction i.e. on the same basis as I distinguished the decision in Harrods above.

Yates

59. Revenue relied on the decision of the UK High Court in Yates (Inspector of Taxes) v GCA International Ltd [1991] STC 157 before the Commissioner and before this Court. In Yates the UK High Court was asked, on a case stated from a decision of the Special Commissioner, to determine whether a Venezuelan turnover tax could correspond to UK income or corporation tax to establish whether unilateral tax relief was properly available. The Court found that it could, having considered the context of the Venezuelan statutory provision which was to address the “obvious difficulties in obtaining full tax returns from foreign taxpayers. The difficulty is dealt with in article 54 by simply providing for 10% of gross receipts to be deducted in order to reduce the taxable income-the ‘net profit’ to use the expression employed in the article.”

60. The Commissioner distinguished Yates as a tax on profits which she said was different to the situation here (at para. 132 of the Determination). The Commissioner found the determinative test to be “whether the tax in question was a tax on profits (which would not be deductible) or a tax incurred in earning profits (which should be).” She concluded that FWHT “must be incurred by [Accenture] in order to earn or profit from the trade; it was part and parcel of the business activity and was a foreseeable condition of earning income and gains. Foreign or WHT was incurred irrespective of whether [Accenture] made a profit. Therefore, incurring foreign or WHT was not merely foreseeable, it was an unavoidable component in determining profit before tax. [Accenture] could not conduct its trade, namely the development, management, the protection and the exploitation of intellectual property without incurring the foreign WHT”.

Thus, she found the test of deductibility as set out in Strong was satisfied

61. However, this misunderstands the approach taken in Yates in considering how and why the turnover tax was imposed, i.e. to obtain full tax returns from foreign taxpayers. That is entirely relevant to the situation here, as confirmed by the experts for both Accenture and Revenue. I found Yates to be a helpful precedent particularly in the light of the evidence from the experts about the FWHT as a tax on notional profit albeit imposed on a royalty payment before Accenture's profits had been determined or calculated.

FWHT as a tax on income

62. The Commissioner's emphasis on the calculation of FWHT on gross income as a basis for her

conclusion that FWHT must be incurred by Accenture to earn or profit from the trade, is misplaced and wrong in law. The test is whether the money was expended for the purpose of earning the profit and as developed in the decision in Smiths Potato, requires consideration of whether the ‘expenses’ are incurred to earn profit or were an application of the profit. The fact that FWHT was imposed on income rather than profit does not determine whether FWHT was expended for the purpose of earning profit. Neither is that determined by the FWHT having been imposed whether Accenture made a profit or not, another point on which the Commissioner placed heavy emphasis. For the Commissioner to conclude, as she did at para. 164 of her determination, that Accenture suffered FWHT for the purpose of enabling it to carry on and earn profit in its trade, put the cart before the horse. The proper test was not applied.

63. The Commissioner found FWHT was a tax on income and is therefore applied after the earnings are made. Counsel for Accenture sought to draw an analogy between FWHT and the charge imposed on a business which permits payment by credit card where, she said, no one would dispute the deductibility of such a charge simply because it is suffered at or just after the point of payment. However, in my view, a credit card charge is part of what is expended for the purpose of earning profit, thereby rendering it properly deductible under section 81. The analogy cannot be applied to the FWHT which the Commissioner found to be a tax on income because FWHT is not expended to secure the royalty payment but is charged after those payments have been earned. It therefore comes within what Lord Selbourne discussed in Mersey Docks and Harbour Board v. Lucas [1883] 8 App. Gs. 891 at page 905 (2 TC 25, page 29), “it is reasonably plain that the gains of a trade are that which is gained by the trading, for whatever purpose it is used. What your Lordships have to determine is whether the expenses incurred in order to earn gain, or is the application or distribution of that gain when earned.”

64. A tax on income cannot also be an expense incurred to earn gain. It cannot be rendered into that which is not and never was, simply because it was charged by a foreign jurisdiction. The fact of an Irish taxpayer having suffered a foreign tax allows them to apply for relief pursuant to the regime established by section 826 and Schedule 24 but does not render what is a non-deductible tax into a deductible expense.

65. There are undoubtedly taxes that are deductible such as rates, stamp duty and employers PRSI, as founded by the Commissioner at para. 33.19 of her determination, as well as the type of compulsory tax that was at issue in Harrods (which I have found to be entirely different from the tax on income at issue here). Those deductible taxes are all fundamentally different to a tax on income as the FWHT here was found to be, as they are incurred before any income is earned whereas FWHT is imposed on income that has been earned. The Commissioner erred (at para. 146 of her determination) in relying on the fact that the State imposes many such compulsory deductions that are permissible section 81 deductions, without properly distinguishing what is a tax on income from those deductible taxes.

66. The Commissioner further erred in finding support for her view that a tax on income should be deductible under section 81 from what she observed was the deductibility of digital services tax, which she said was a tax on income. Digital services tax is not an Irish tax. It is governed not by Irish law but by the rules of whatever foreign jurisdiction has charged it to an Irish taxpayer. I fail to see how the Commissioner could have properly made the broad and generalised observation that digital services tax is a tax on income and therefore comparable to the FWHT at issue here, despite having heard no evidence or even submissions about how this relatively new tax operates in the jurisdiction in which it may arise. The Revenue guidance which the Commissioner referred to does not constitute evidence that would have supported the Commissioner’s observations as it is, as it says, simply guidance.

67. There was no evidence before the Commissioner that allowed her to make an observation that digital services tax charged in some foreign jurisdictions are somehow in the nature of a tax on income. The Commissioner erred in making that observation or allowing it to influence or support her conclusions that FWHT was a section 81 deductible expense.

Issue three

68. Questions one and two related to findings or inferences of fact made by the Commissioner which Revenue contained were unsupported by the evidence and/or were unreasonable inferences.

69. Question one is premised on the Commissioner's finding that Accenture could not have traded in the foreign jurisdiction without incurring FWHT. It was accepted by Accenture as a proposition, that if Accenture had prominent establishments in those jurisdictions, the FWHT would not have been charged. However, Accenture submits that this was an irrelevant hypothetical proposition. For the reasons set out above I do not agree. Accenture had and made a choice about how it would license its IP in foreign jurisdictions without having a permanent establishment there, as a consequence of which they incurred FWHT. The FWHT did not have to be incurred. Accenture could have conducted its trade without incurring FWHT by establishing permanent establishments in the jurisdiction in which it wished to licence its IP.

70. FWHT, as a tax on income (as found by the Commissioner) was not incurred for the purposes of earning profit but was rather an application of Accenture's income, from which profit would eventually be calculated. It is, therefore, inaccurate to say that FWHT was "part and parcel" of Accenture's business activities or a foreseeable condition of earning income and gains.

71. Question two relates to the evidence about the law on FWHT in Argentina. Accenture presented expert evidence to the Commissioner that Argentinian FWHT could be described as an effective rate of 31.5% on the gross amount. It was put to that witness by counsel for Revenue that the FWHT rate of 35% is applied on a net basis to which he replied "in a theoretical way the answer is yes". The Commissioner summarised this expert's evidence at paragraph 28 of her determination. It is a fair summary of the evidence given. The Commissioner accepted that FWHT would not have applied if Accenture had a permanent establishment in Argentina.

72. Revenue criticised the Commissioner's finding at paragraph 33.14 of her Determination that FWHT applied on gross royalties because they say that the evidence established that FWHT in Argentina is imposed on a net basis. I do not think the evidence is as clear cut as that. I note Revenue did not call an expert to challenge Accenture's expert on Argentinian FWHT.

73. I do not consider that the Commissioner made a finding unsupported by the evidence in this regard.

Conclusion

74. I have found errors of law in the Commissioner's analysis of the law and applications to the facts of this case in relation to questions 1 and questions 3-11 for the reasons set out above.

75. I will put the matter before me at 10am on 21st May to allow the parties to make submissions on the appropriate orders to be made arising from my findings. Any written submissions should be filed with the court at least 48 hours in advance of the matter coming back before me.

Counsel for the Revenue Commissioners: Conor Bourke S.C., James Byrne B.L.

Counsel for Accenture: Grainne Clohessy S.C.