Apple pays Ireland €14bn in disputed back taxes

Ireland has collected €14.3bn in disputed back taxes and interest from Apple, more than two years after Brussels decided that the tech giant’s sweetheart tax deal with the country violated EU law.

Paschal Donohoe, Ireland’s finance minister, announced on Tuesday that his government had recovered €13.1bn in back taxes and €1.2bn in interest from the iPhone maker. The money will be held in an escrow account pending Dublin’s appeal against the ruling.

Mr Donohoe said: “The government fundamentally disagrees with the [European] Commission’s analysis in the Apple state aid decision and is seeking an annulment of that decision in the European courts.”

He said that as a committed EU member Ireland had “always confirmed that we would recover the alleged state aid”.

EU competition commissioner Margrethe Vestager concluded in 2016 that the iPhone maker’s tax arrangements, which she said resulted in a tax rate of less than 1 per cent, were illegal under the bloc’s state-aid rules. Brussels ordered Dublin to recover the back taxes with interest. Parties usually have four months to repay illegal state aid.

The case was one of nine launched as part of a wider EU crackdown started in 2013 examining tax rulings in member states.

The original Apple decision attracted claims of anti-American bias and the final payment comes amid transatlantic tension over trade and a proposed EU tax on digital services. Both Ireland and Apple deny the charge and have appealed Ms Vestager’s decision to the European courts.

Last October, a year after the initial decision, Ms Vestager grew impatient and filed a case with the European Court of Justice against Ireland for failing to implement her decision. Apple started to pay the money into escrow in May.

Mr Donohoe defended the process, saying it was one of the largest funds of its kind to be set up. “It has taken time to establish the infrastructure and legal framework around the escrow fund but this was essential to protect the interests of all parties to the agreement,” he said.

As it can take years to exhaust the appeals process, the Irish government and Apple wanted to agree how the money would be managed and how any changes in value would be apportioned.

Apple declined to comment and referred to a statement from last year, which said it continued to co-operate with the mandated recovery process but was confident the commission’s decision would be overturned.