Drugmaker company, Perrigo, has settled its long-running dispute with Revenue over a €1.64bn tax bill, for just under €300m.

The original €1.64bn bill was understood to have been the largest ever issued by Revenue.

The firm was served the notice of assessment in 2018, which was based on its tax treatment of income arising after the sale in 2013 by Elan of its intellectual property stake in a multiple sclerosis drug called Tysabri to Biogen.

Elan was bought by Perrigo in 2013, eight months after the Biogen deal.

Revenue found that the intellectual property sales by Elan were taxed as trading income at 12.5%, when they should have been treated as a chargeable gain at a rate of 33%.

Last November Perrigo lost a High Court challenge to the tax bill.

However, it continued to have an outstanding appeal before the Tax Appeals Commission (TAC) which was due to be heard this November.

In May of this year it said that Revenue had rejected an offer it had made to settle the back taxes.

The company added it would "vigorously pursue its tax appeal before the TAC", concurrently with any settlement discussions that may occur, unless and until a final settlement was reached.

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However, in a statement to the stock market and media last night, Perrigo said that on July 9, Revenue acknowledged that not all relevant facts were known to them when they issued the notice of assessment in 2018 and that as a result, it would not object to certain adjustments that would result in a reduction of more than €660 million from the income taxes claimed in the bill.

The company added that at that point, it believed that the maximum amount of income tax claims in dispute was effectively reduced to less than €1.0 billion, not including any interest or penalties.

But despite this, it said that while it believes that its position was correct and would ultimately have been confirmed by the TAC, given the costs and uncertainty of litigation, it and Revenue had subsequently agreed to settle.

The terms include a payment of €297m in full and final settlement of all liabilities arising from the sale of Tysabri patents.

Revenue will give Perrigo credit for taxes already paid and for research and development credits, reducing the total cash payment due to Revenue to €266m.

Under the terms, no interest or penalties will apply.

Both sides have agreed to apply an alternative basis for taxation than their previous positions.

The company said Revenue has confirmed in writing that it accepts the terms and a formal settlement agreement is expected to be executed in the coming days, with the €266m to be paid within seven days after that.

"We believe settling this tax dispute with Irish Revenue is in the best interest of all of Perrigo's stakeholders as it removes a major uncertainty that has been a significant distraction to the Company over the last three years," said Perrigo President and CEO Murray Kessler.

"While we continue to believe that our tax positions were correct and would ultimately have been confirmed through the tax appeal process, we recognize that this process was uncertain and could take many more years to complete."

"With what was once a multi-billion dollar uncertainty behind us, Perrigo can focus all of our efforts on delivering on our Consumer Self-Care vision and long-term value."

Speaking on Morning Ireland, the Minister for Finance, Paschal Donohoe, said the parameters of the Budget will not be changed by the details of any individual transaction such as this one.