Billions of euros are expected to flow into Ireland’s coffers through September as the tech giant shells out for alleged illegal tax breaks covering ten years. Yet Ireland and Apple continue to dispute the EU’s orders.
Apple and Irish finance minister, Paschal Donohoe, were set to sign the formal legal agreement that will allow Ireland to collect some €13 billion ($16 billion) in past taxes from the tech giant following orders from the European Commission, the Irish finance ministry announced Tuesday.
While the signing means that Apple can start making back payments that span a decade to the European Union nation, both parties continue to dispute that Ireland gave Apple preferential tax treatment amounting to illegal state aid.
Details of the pay-back deal
- Donohoe said the Escrow Framework Deal for “the recovery of alleged state aid” would be signed sometime on Tuesday.
- Once the deal is signed, Apple can begin payments into an escrow fund set up for the explicit collection of Apple’s back tax.
- Apple is expected to pay in multiple installments, with all money transferred by the end of this year’s third business quarter.
An unwanted ‘milestone’
Donohoe said in a statement that the signing of the deal was “a significant milestone” and described the framework as “the largest recovery fund of its kind ever to be established.”
However, he added that “The [Irish] Government fundamentally disagrees with the ruling of the Commission” in 2016 that ordered the country to collect around €13 billion plus interest from Apple.
A EU Commission spokesperson said that it hoped the back tax would be recovered as quickly as possible.
Why does Apple have to pay? In August 2016 the European Commission ruled that the tech company had benefitted from unfair tax advantages in Ireland from 2004 through 2014. The EU body said that Apple paid an effective coroporate tax rate equal to just €50 for every million of its 2014 profits.
What is the disagreement? Apple and Ireland both say that the company’s tax treatment followed both Irish and EU law. Furthermore, the EU has taken Ireland to court over delays in the payment of back tax, but the Irish government has said it has acted as fast as it could.
Why Ireland? The EU nation has courted major multinational companies such as Facebook, Google and Apple — all of which have their European headquarters in Dublin — by providing access to the EU single market with a low corporate tax rate.
Upcoming appeal: Donohoe told journalists that an appeal by Ireland and the tech company against the payments would likely begin this fall.