An American-registered order of Catholic nuns which runs an old people's home in Co Clare yesterday defeated a High Court move by the Revenue Commissioners to have it deemed liable for income tax.
The Sisters of Charity of the Incarnate Word, which runs Carrigoran House at Newmarket-on-Fergus, was told by the Revenue Appeals Commissioners that it was not exempt from paying income tax on the grounds that it had not been proven that the branch was established in the State as required by the 1967 Income Tax Act.
That ruling was appealed to the Circuit Court, which reversed the Appeals Commissioner's decision and asked the High Court to determine whether the branch was established within the State within the terms of the Act.
In a reserved judgment, Mr Justice Geoghegan said a foreign charity with "no activities base" in Ireland was not entitled to a tax exemption.
But a foreign charity which did have such a base was entitled to exemption in respect of funds applied towards the charitable activities, he ruled.
There was sufficient establishment within Ireland for the order's Carrigoran branch to qualify for the exemption, he said. It was not contested that the order was established for charitable purposes only, he noted.
The judge said the "rather extreme interpretation" being contended for by the Revenue Commissioners could have "wide unintended repercussive effects in Ireland where there must be many religious orders running charitable institutions but subject to varying degrees of control by superiors outside of Ireland."
The Congregation of the Sisters of Charity of the Incarnate Word was founded in 1866 in Texas. The order obtained an £800,000 loan to set up the Co Clare nursing home in 1972. The loan was secured by a mortgage on the property.
The Irish operation is under the control of the Texas management. Set on 60 acres, the home caters for 150 patients and has a staff of 85, four of whom are members of the order.