American tech giant Apple will start paying Ireland in May for back taxes and penalties owed as part of the European Commission’s 2016 ruling on the illegal state aid case involving both parties.
According to the European Commission’s decision, Apple owes Ireland close to 13 billion Euros in back taxes and associated fines after the American company benefited from tailor-made tax schemes that no other firm in the country had access to.
Apple and the Irish government have reached an agreement to hold these payments in escrow as the US company and Irish government plan on appealing the Commission’s decision.
As reported by Politico’s Cat Contiguglia, this deal more specifically “sets the groundwork for the collection of money, as the custodian and investment managers for the account can now be appointed, and formal accounts can be opened into which funds will be paid.”
Furthermore, writes Contiguglia, “the preferred provider of escrow agency and custodian services is Bank of New York Mellon, London Branch, while Amundi, BlackRock Investment Management (UK) Limited and Goldman Sachs Asset Management International have been selected as preferred providers of investment management services.”
Ireland’s Finance Minister Speaks Out on Apple Deal
Paschal Donohoe, Ireland’s Minister of Finance, spoke to the press about this agreement between his government and Apple.
“The government fundamentally disagrees with the ruling of the commission. However, as committed members of the European Union, Ireland is intent on complying with our binding legal obligations in this regard,” Donahoe announced earlier this week.
“This is the largest recovery fund of its kind ever to be established and, due to the complexity of such, together with our duty to comply with EU procurement rules, it has taken some time to get to this point,” he said.
“This is a very, very significant day now in terms of dealing with this issue,” he added.
Donohoe also commented on the timeline surrounding the appeal process.
“We expect the appeal is likely to begin in the autumn,” he said, adding that its duration “will depend on the judges overseeing it and could be open to either party after that to take any further action.”
All in all, Donohoe is adamant that Ireland will not touch this money and expects to win the appeal.
During a interview on Today with Sean O’Rourke, Donohoe reiterated, “We have to win this appeal and I am putting all the right resources behind us winning it. The reason for that is that any potential gain that might be made here would be rapidly offset by the consequences to our tax policy because it would mean that outside bodies believe that we cut deals for companies — and we do not.”
Additionally, he said, “If in any circumstance we were to lose this appeal, what would immediately happen is that every other country in the European Union, and potentially outside of the European Union, would say they’re owed a share of this money. And that is why, while we’re collecting this money, I’m not spending it.”
“It’s not our money and if we were to spend it, the risk that it would create in the future for us if we were to lose the appeal would be truly gigantic,” Donohoe concluded, adding that for Ireland “there’s no pot of gold” at the end of either result.
Ireland Receives Pressure from European Commission to Collect Apple Tax
Ireland is also being pressured by the European Commission for its failure to collect the funds in time.
The European Commission required Ireland to take possession of the money owed by January 2017 and has threatened to take the country to the European Court of Justice as a result of this delay.
Politico’s Cat Contiguglia believes this “progress toward recovering the money likely saves Ireland from a second ECJ referral that could result in a fine.”
The 13 billion Euros in back taxes owed are expected to be in the escrow account by the end of the third quarter (September) with the related interest to follow.