European Commission refuses to hand over papers on Ireland’s largest property tax break (because Department of Finance has objected)

Back in December 2008, then-foreign affairs minister, Micheal Martin had to sheepishly approach the European Commission for retrospective approval of tax incentives given by the State for the Treasury Holdings development of the Ritz Carlton hotel in Powerscourt, county Wicklow in 2006 – “sheepishly” because he was late in making contact with the Commission about the scheme and the Commission was forthcoming in expressing its displeasure. But nonetheless, the Commission granted retrospective approval, and a number of well-heeled individuals including TV and radio presenter, Pat Kenny who was an investor in the scheme, will no doubt have breathed a sigh of relief that Minister Martin had saved the day, otherwise the Revenue Commissioners might have been knocking on the investors’ doors looking for the return of the tax relief.

You might wonder why Ireland had to bother to seek approval in the first place for a domestic tax break – the answer lies in the scale of the tax break – a whopping €212m, so big that Ireland had to get approval under Commission state-aid rules, and it is believed to be the largest individual property tax break granted by the last government.

The whole episode was buried until November 2012 when examiners were appointed to the hotel development, and the issue of the tax break again reared its pretty head. If the hotel failed, it seems that the Revenue Commissioners would automatically seek the return of tax reliefs previously granted.

And in the interests of transparency and providing value on this blog, a formal request was made to the European Commission on 20th November 2012 for the documents which pertained to the case – if nothing else, they would have reminded us of the hubris of the Celtic Tiger boom. There was an initial response from the Commission saying it would need more time than normal to provide the documents and the deadline was set for last Friday 11th January 2013. A response was received which said that the Commission was still consulting with the Irish authorities, the Department of Finance presumably, about the release of the requested documents.

An so-called “confirmatory application” was made by the blog, which essentially means that a request was made to “speak to the supervisor”. Today, a response has been received which helpfully sets out the documents that pertain to the case but says that the Irish authorities have objected to the release of the information.

Why?

According to the Commission,

“Pursuant to Article 4(1)(b) of Regulation 1049/2001, access to a document where disclosure would undermine the protection of the privacy and the integrity of the individual, in particular in accordance with Community legislation regarding the protection of personal data shall be refused. The requested documents contain a large volume of personal information whose public disclosure would undermine the protection of the privacy and the integrity of the individual”

And

“Pursuant to Article 4(2), first indent of Regulation 1049/2001, access to a document where disclosure would undermine the protection of commercial interests of a natural or legal person, shall be refused. The requested documents contain a large volume of commercially sensitive information whose public disclosure would undermine the protection of the commercial interests of the person who provided them”

So what now?

A complaint was made to the European Ombudsman yesterday, and this latest communication will be appended to that. The Ombudsman may order the release of some or all of the documents. They are a valuable record of what is believed to be the biggest ever property tax break granted in Ireland.

But the document listing itself is of interest and reveals for the first time, that the decision in 2010 to retrospectively approve the state aid was by no means the end of the matter, and it seems that there were further exchanges between the “Irish authorities” and the Commission which only ended in May 2011.