Ryanair claims it should be refunded €770,000 (£656,000) in VAT for professional services related to its unsuccessful 2006 bid to take over Aer Lingus, the Irish High Court heard.
In October 2006, Ryanair succeeded in acquiring 29% of Aer Lingus but failed to get a 100% shareholding.
Ryanair applied to claim VAT on the professional fees incurred in the bid as deductible, but a revenue appeals commissioner refused to allow it to do so.
It appealed that decision to the Circuit Court where, in May 2011, Judge Jacqueline Linnane dismissed the appeal saying the professional fees were not part of its general business.
Yesterday, Martin Hayden SC, for Ryanair, argued before the High Court that Judge Linnane had erred in law on a number of grounds including that his client had provided evidence that it did not intend to hold shares in Aer Lingus as a passive investor – which would have constituted a "non-economic activity" for the purposes of a VAT deduction.
It was its intention to carry out management services in Aer Lingus, which was a "VAT-able activity", counsel said.