Saturday

10th Jun 2023

Apple to pay back Ireland €13bn in lost tax

  • Apple's HQ in Cork, Ireland, employs more than 5,000 people (Photo: Joseph Teegardin)

US tech giant Apple has provisionally agreed to pay back Ireland €13 billion in what the EU called illegal state aid.

The money will begin to flow into an escrow account in January, where it will remain blocked pending a definitive ruling on the case by the EU Court of Justice in Luxembourg.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • Donohoe: 'Everybody ... should pay their fair share of tax' (Photo: consilium.europa.eu)

An escrow account is one held by a third party while the two main participants complete their transaction.

"We expect the money will begin to be transmitted into the account from Apple across the first quarter of next year," Irish finance minister Paschal Donohoe told press in Brussels on Monday (4 December).

"Across the period in which we are defending the ruling, we will be complying with our obligations in terms of collecting the money from Apple," he said.

The €13 billion covers the period 2003 to 2014 when Apple, which has its European, Middle East, and Africa HQ in Cork, in southern Ireland, paid Ireland 0.005 percent corporate tax instead of the country's normal 12.5 percent rate in a sweetheart deal called a "tax ruling".

The EU ordered Apple to repay the money to Ireland in August 2016.

It then sought an EU court injunction to go after the funds after Ireland refused to comply, with both Ireland and Apple challenging the court ruling in ongoing proceedings.

Donohoe, who was in the EU capital on Monday to meet fellow finance ministers and to update EU anti-trust commissioner Margrethe Vestager on the Apple case, said it was "difficult" because of the "scale of the fund and the uniqueness of this issue".

But he said the Irish government had made "significant progress" in agreeing the "principles and operation of the escrow fund".

A commission spokesman said the same day: "We hope that we can work constructively with the Irish authorities to make sure that recovery is completed as soon as possible".

The US firm also changed its tune on Monday.

Apple CEO Tim Cook had called Vestager's probe "total political crap" back in 2015.

The firm said in a statement on Monday it was "confident" that the EU court would rule in its favour.

"The commission's case against Ireland has never been about how much Apple pays in taxes, it's about which government gets the money," it said.

"The United States government and the Irish government both agree that we've paid our taxes according to the law," it said.

But it added that it was working "diligently and expeditiously with Ireland on the [escrow] process".

Wider crackdown

Apple is part of a wider EU crackdown on tax avoidance that began after the so-called 'Luxleaks' revelations in 2014 on secret tax rulings by member states.

The €13 billion amounts to almost 6 percent of Apple's cash reserves as of August.

The US firm shifted its EU profits to a shell firm in Jersey, a UK protectorate, to keep on avoiding tax after Ireland closed its loophole, the so-called 'Paradise Papers' leak revealed in November.

The commission has already clawed back money in Belgium and the Netherlands in actions involving corporate giants Fiat, McDonalds, and Starbucks, and recently launched an investigation into UK tax practices.

It has also proposed new laws to increase tax transparency in Europe, as well as financial sanctions against jurisdictions that were to be blacklisted as tax havens by EU finance ministers in a new list due out on Tuesday.

Irish reputation

That blacklist should include Ireland, NGOs have said, but EU states are to be automatically excluded from the register.

Ireland's Donohoe hit back on Monday by saying that the OECD, the Paris-based club of wealthy nations, had placed Ireland in its "highest category" on tax transparency along with just 21 other countries worldwide.

He also said Irish authorities had recovered €1 billion in recent times from "offshore operations [designed] to avoid tax liabilities".

"Ireland has and will play its role in what's needed to deal with the issue of aggressive tax avoidance", Donohoe said.

"Everybody, whether individuals or companies should pay their fair share", he said.

Irish government in moral dilemma on Apple tax

Anti-poverty activists in Ireland say the government's decision to appeal an EU commission order for Apple to pay back €13 billion undermines its moral authority.

EU 'tax lady' hits Google with record fine

Margrethe Vestager has fined the US tech giant with €4.34bn for abusing its market dominance in mobile operating systems - but assured US president Donald Trump that it is not because she does not like America.

EU set to probe Ikea tax affairs

Swedish founded furniture retailer Ikea has reportedly been targeted by the European Commission, which is set to launch an investigation into how tax schemes in the Netherlands allegedly enabled it to avoid paying into public coffers.

EU Commission: Apple paying so little tax still unfair

The European Commission says it needs more time to study a ruling before it can fully explain why it lost a landmark case against Apple at the General Court of the European Union in Luxembourg.

Opinion

The 'BlackRock exemption' has no place in the EU's due diligence directive

With the EU's Corporate Sustainability Due Diligence Directive, there's an opportunity to harness the power of investment for truly sustainable activities. But to do this, it must not allow the 'BlackRock exemption' and instead cover institutional investors and asset managers.

Final push for EU-Mercosur deal, amid deforestation fears

Finalising the EU-Mercosur agreement is a priority for the EU and the upcoming Spanish EU council presidency, ahead of the summit with Latin America and the Caribbean countries to be held in Brussels on 17 and 18 July.

Latest News

  1. Negotiations on asylum reform to start next week, says MEP
  2. EU gig workers compromise dubbed ‘a disaster for workers’
  3. EU's one-off chance to influence Laos taking over ASEAN chair
  4. Belgian bâtonnier on Russia: 'You can have a client you don't like'
  5. EU's proposed ethics body 'toothless', say campaigners
  6. Study: 90% of Spanish inflation 'driven by corporate profits'
  7. If Spanish economy is doing well, why is Sanchez poised to lose?
  8. EU lawyers for Russia: making 'good' money?

Stakeholders' Highlights

  1. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations
  2. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  3. ICLEISeven actionable measures to make food procurement in Europe more sustainable
  4. World BankWorld Bank Report Highlights Role of Human Development for a Successful Green Transition in Europe
  5. Nordic Council of MinistersNordic summit to step up the fight against food loss and waste
  6. Nordic Council of MinistersThink-tank: Strengthen co-operation around tech giants’ influence in the Nordics

Stakeholders' Highlights

  1. EFBWWEFBWW calls for the EC to stop exploitation in subcontracting chains
  2. InformaConnecting Expert Industry-Leaders, Top Suppliers, and Inquiring Buyers all in one space - visit Battery Show Europe.
  3. EFBWWEFBWW and FIEC do not agree to any exemptions to mandatory prior notifications in construction
  4. Nordic Council of MinistersNordic and Baltic ways to prevent gender-based violence
  5. Nordic Council of MinistersCSW67: Economic gender equality now! Nordic ways to close the pension gap
  6. Nordic Council of MinistersCSW67: Pushing back the push-back - Nordic solutions to online gender-based violence

Join EUobserver

Support quality EU news

Join us