Apple to begin paying Ireland €13bn in back taxes from early 2018

4 Dec 201781 Shares

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Apple store in London. Image: R Classen/Shutterstock

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Apple has agreed a deal with Ireland to cough up €13bn in unpaid taxes.

Although both Apple and the Irish Government are challenging the European Commission’s levelling of a major fine against the company, Apple will now begin lodging unpaid taxes into an escrow account.

From early next year, Ireland will begin collecting the €13bn ($15bn) in back taxes.

‘We expect that the money will begin to be transmitted into the account from Apple across the first quarter of next year’
– PASCHAL DONOHOE, TD

In 2016, the European Union (EU) ordered the Irish Government to retrieve the billions of euros that the EU claims Apple avoided paying, thanks to alleged sweetheart deals.

After finding that Apple enjoyed a special agreement of sorts with the Irish Government, €13bn was the value EU competition commissioner Margrethe Vestager put on the arrangement.

“This selective treatment allowed Apple to pay an effective corporate tax rate of 1pc on its European profits in 2003, down to 0.005pc in 2014,” she said at the time.

Apple CEO Tim Cook dismissed any wrongdoing, saying: “It’s maddening. It’s disappointing. It’s clear it comes from a political base and has no basis in fact.”

Well, how do you like them apples?

While Ireland is challenging the judgement by Vestager, it is expected to collect the money in the meantime. Ireland had already missed a deadline to begin collection a year ago.

“We have now reached agreement with Apple in relation to the principles and operation of the escrow fund,” Ireland’s Finance Minister Paschal Donohoe, TD, told media in Brussels today (4 December).

“We expect that the money will begin to be transmitted into the account from Apple across the first quarter of next year.”

The agreement is understood to be in response to the threat of legal proceedings against Ireland over the non-collection of the back taxes so far. Ireland is also battling perceptions that it has become a sort of ‘fiscal paradise’ used by corporations to avoid paying taxes.

The Irish Government is understood to be seeking to appoint an investment manager and custodian to operate the account.

The core of the issue is that both Apple and Ireland claim that the tech giant was fully compliant with Irish sovereign tax rules.

The case is likely to rumble on for several years while the €13bn languishes in an escrow account.

Apple store in London. Image: R Classen/Shutterstock

Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com