CANBERRA – Sir Richard Branson may be less generous at the Virgin Group Christmas party this year after the UK billionaire lost a High Court bid to get access to more than A$65 million worth of dividends from his stake in Virgin Blue, the airline he founded in Australia.
The High Court ruled the money, plus interest, would continue to be held in an Australian bank while a long-running legal dispute between Branson and the Australian Taxation Office reaches a conclusion.
The ATO has been chasing two of Sir Richard’s Swiss-based companies, Cricket and Virgin Holdings, over an $84 million capital gains tax bill it claims arose from the sale of shares in the Australian budget airline before its 2003 stock market float.
Virgin Blue, of which Sir Richard is the second-biggest shareholder, was issued with notices by the tax office to withhold more than $65 million, plus interest, that it was going to pay two Swiss entities as a dividend payment.
The two companies were the vehicles for Sir Richard’s Virgin Group ownership of a 25 per cent stake in the Australian airline.
Under the Australian tax laws, when a company has control over money due to a non-resident it can be required to retain the money and pay it to the tax office for the liability incurred by the non-resident.
In a complex deal, the Swiss entities subsequently assigned the dividend money to other companies associated with the Virgin Group.
