EU Forces Ireland To Collect €13bn In Back Taxes From Apple

Ireland is now being forced to comply with the legal requirements of the European Union (EU) that ordered Apple Inc. to pay back taxes amount to billions of dollars.

In accordance with the European Commission’s ruling in 2016, Apple will now start paying €13 billion (US$15 billion) in back taxes to Ireland. The payment has been organized in a special payment scheme where it will all be collected in an escrow fund managed by Ireland.

According to Irish Finance Minister Paschal Donohoe, the payment will be transmitted into a blocked separate account starting first quarter of 2018. In a statement, Donohoe said,

These sums will be placed into an escrow fund with the proceeds being released only when there has been a final determination in the European Courts over the validity of the Commission’s decision

This means that the collected money might not necessarily go to Ireland. EU Competition Commissioner Margrethe Vestager said that other countries could file claims for the money. Other EU member states could follow the Commission’s investigations and demand more taxes from Apple, if they find that the US tech giant is underpaying them as well.

CNNMoney

Some of the money could also be paid to Apple’s US parent company to fund their research and development arm. The paying party would be the two Apple companies in Ireland: Apple Sales International and Apple Operations Europe.

The decision by the EU to get Apple to pay comes across as a forced decision as Ireland does not want the money. The country has filed an appeal to the General Court of the EU to have the European Commission’s 2016 ruling dismissed. The Irish government claims that Brussels is overstepping Ireland’s sovereignty by trying to rewrite their corporation tax regulations.

Ireland has been known to offer low corporate tax rates, which has attracted many multinational companies like Apple, Pfizer and Intel. Its corporate tax rate of 12.5 percent is one of the lowest among European countries, as most EU countries have a tax rate that is nearly double.

Since 2016, Ireland and Apple have been battling the European Commission regarding the so-called special tax deal between the Irish government and the US tech giant. In August 2016, the commissioned found that Apple only paid an average rate of 1 percent in corporate tax to the Irish government since 2003, with the rate going down to as low as 0.005 percent in 2014.

According to EU tax regulations, countries have the right to set their own corporate tax rates, provided that these rates do not provide unfair competitive advantages to certain companies in their territory.

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