Ireland makes U-turn, says will collect €13 billion back taxes from Apple

Irish finance minister Paschal Donohoe at the eurogroup on 4 December 2017. [European Council]

The Irish government has reached an agreement with Apple to start collecting the €13 billion owed by the tech giant, it announced on Monday (4 December).

“We have now reached agreement with Apple in relation to the principles and operation of the escrow fund,” Finance Minister Paschal Donohoe said in Brussels in quotes confirmed to AFP by Ireland’s finance ministry.

“We expect the money will begin to be transmitted into the account from Apple across the first quarter of next year,” he added before a meeting with the EU’s Competition Commissioner Margrethe Vestager.

The European Commission ruled in August 2016 that the iPhone maker must reimburse the Irish state a record €13 billion to make up for what it considered to be unpaid taxes over a number of years.

Brussels Apple tax ruling reverberates across the Atlantic

The European Commission’s demand for Apple to pay back a record 13 billion euros in back taxes in Ireland has triggered warnings that it could damage transatlantic economic ties. Others in Washington, however, used the case to call for an international tax system to ensure revenues are paid where they are due.

The ruling stated that tax benefits received by the tech company were illegal under EU rules, because they allowed Apple to pay substantially less tax than other businesses.

The announcement comes after some tension with Brussels, which referred Ireland to the European Court of Justice in October of this year for failing to collect the back taxes.

Ireland set out arguments against EU in Apple tax ruling

Ireland set out its arguments on Monday (19 December) against a European Commission ruling that tech firm Apple should pay billions in back-taxes to Dublin, claiming the EU executive arm has interfered in state sovereignty.

The Irish government must now put the sums in a blocked bank account while waiting for the result of Apple’s and its own appeal to the European Commission.

Ireland built its economic success on being a low tax entryway for multinationals seeking access to the EU, and is concerned that collecting the back taxes could dent its attractiveness to firms.