Ireland Forced to Demand £11.4 Billion in Apple Back Taxes

Apple CEO, Tim Cook, attends the 2015 Ripple Of Hope Awards

The European Commission has required Ireland to force Apple to pay £11.4 billion (€13 billion) in back taxes. The E.C. said Ireland was providing Apple with unfair tax incentives and has now laid down the record breaking requirement.

Apple Must Pay in Q1 2018

Ireland now expects Apple to add the sum to an escrow account during the first quarter of next year, said Irish Finance Minister Paschal Donohoe. The E.U. originally laid down the order more than a year ago, in August 2016, but Dublin has been dragging its heels to collect the money. This landed Ireland in court, forcing them to demand payment from Apple.

Ireland is currently looking into an investment manager as well as a custodian for operating the Apple escrow account and will be making both appointments in January.

Ireland’s Agreement with Apple

“We have now reached agreement with Apple in relation to the principles and operation of the escrow fund,” said Donohoe to the media ahead of a meeting with Margrethe Vestager, European Competition Commissioner. “We expect the money will begin to be transmitted into the account from Apple across the first quarter of next year.”

Facebook's EMEA (Europe, Middle East and Asia) headquarters at Grand Canal Square in Dublin, Ireland.
Facebook’s EMEA (Europe, Middle East and Asia) headquarters at Grand Canal Square in Dublin, Ireland.

It should be noted that Ireland and Apple have both challenged the European Union’s order for Apple to be required to make the payment in the first place. Ireland has seen considerable economic success by providing multinationals with a low tax opportunity to step into the European Union.

That said, last year’s ruling from the European Commission stated that the tax incentives Ireland gave Apple violated E.U. regulations. This was because it made it possible for Apple to pay considerably lower tax rates than other companies.

Ongoing Conflict Between Ireland and the EU

The announcement that Apple will be required to pay back taxes to Ireland follows other disagreements with Brussels, which already sent Ireland to the European Court of Justice two months ago for having failed to make a reasonable effort in back tax collection.

The Irish government is now required to place the collected back taxes in escrow until it receives the final ruling for the appeal it has made – and that Apple has made – to the European Commission.

Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.