Had the TAC found in favour of the Revenue on this point, Irish taxpayers could have been faced with practical uncertainties concerning the treatment of LLCs, similar to those that arose in the UK in the immediate aftermath of the Anson case. The taxpayer countered with its own expert evidence that Delaware LLCs do indeed have perpetual succession.
The Revenue argued that the LLC was not a body corporate, in particular, on the basis of expert evidence from the US that an LLC does not enjoy perpetual succession. That approach involves, firstly, determining the foreign law characteristics of the entity and, secondly, determining whether an entity having those characteristics would be akin to a body corporate under Irish law. The approach in the UK Memec case is followed when considering the treatment of a foreign entity. Ireland does not have statutory tax rules for foreign entity classification.
It was accepted by the Revenue that if the LLC was a body corporate and a resident of the US that the non-discrimination analysis applied in the UK FCE Bank case would be followed and that the Irish group relief would be allowed. The Irish Revenue Commissioners (Revenue) are appealing the latter aspect of the decision. In a recent decision, concerning claims for group loss relief by Irish subsidiary companies of a Delaware LLC, the Irish Tax Appeals Commission (TAC) found that (i) the LLC parent was a "company" and (ii) adopting a purposive interpretation, the LLC should be treated as a US tax resident for the purposes of the Ireland/US double tax treaty.
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