Apple withdraws €209m from €14bn escrow account to pay tax in another country

Money held in account to pay tax owed to State used in other country, PAC hears

In August 2016, the European Commission ordered Apple to pay €13 billion plus interest in back taxes to the Irish exchequer. Photograph: AFP via Getty

In August 2016, the European Commission ordered Apple to pay €13 billion plus interest in back taxes to the Irish exchequer. Photograph: AFP via Getty


Apple withdrew €209 million from the €14 billion escrow account set up to hold tax owed to the State and used it to pay tax in another jurisdiction, the Public Accounts Committee (PAC) has heard.

Comptroller and Auditor General (C&AG) Séamus McCarthy told the committee that net assets in the fund declined to €14.02 billion at the end of last year from an opening balance of €14.28 billion, a loss in value of €265 million.

The largest part of the reduction was a €209 million withdrawal related to what is called “a third-country adjustment,” he said.

This was a payment of tax by the tech giant in another jurisdiction, he said, noting that this was within the scope of how the account operated.

“Separate from the administration expenses incurred by the fund account, State bodies have incurred significant costs in setting up the escrow account, and in mounting legal challenges to the Commission’s state-aid determination,” he said.

In August 2016, following a two-year investigation, the European Commission ordered Apple to pay €13 billion (plus interest) in back taxes to the Irish exchequer, claiming the company had received “illegal” tax benefits over the course of two decades that constituted a breach of state-aid rules.

In 2018, Apple transferred €14.3 billion into an escrow fund set up by the Department of Finance.

The total payment included the principal amount of €13.1 billion plus interest of about €1.2 billion.


The Government and Apple successfully appealed the commission’s original finding earlier this year, with Europe’s second-highest court ruling that Ireland did not give Apple illegal state aid.

The General Court in Luxembourg ruled that the commission “did not succeed in showing to the requisite legal standard” that Apple received tax advantages from the Republic.

The commission is appealing that ruling before the Court of Justice of the European Union, the EU’s highest court.

The fund suffered a €37 million loss last year as a result of negative interest rates. Most of the funds are held in the form of government bonds, which are currently paying interest rates of less than zero.

Also appearing at the committee was Derek Moran, secretary general of the Department of Finance, who said the Apple case had huge implications for tax certainty here.

“In contesting the case, it’s very much about saying that the Irish tax system abides by the law, it doesn’t give favourable deals,” he said.

Mr Moran said the Irish Government’s appeal had cost €4 million in legal fees.

The Department of Finance’s chief economist John McCarthy said the State’s debt was likely to hit €239 billion by the end of next year on the basis of current crisis spending.

He said the State was able to absorb this once-off increase the level of public indebtedness. “What really matters is the trajectory of the debt to income ratio,” he said.