Apple will place the first tranche of its €13 billion Irish tax bill in an escrow account next month following the signing of a legal agreement between the Government and the US tech giant.
It is anticipated that Apple will make a series of unspecified payments into the account starting in May with the full amount expected to be recovered by the end of September.
“This is a significant milestone with regard to the commencement of the recovery of the alleged State aid, as the escrow framework deed is the overarching agreement which will govern the collection and eventual payment of funds,” Minister for Finance Paschal Donohoe said.
The European Commission ruled in 2016 that the State gave Apple €13 billion in illegal tax aid, and ordered that it pay the Government the full amount plus interest.
When interest is added the final figure could reach €15 billion but the Department of Finance said it was not possible to calculate the interest until all the money had been recovered.
The interest will remain with the principal amount and accrue to the State unless the commission’s ruling is overturned on appeal.
Both Apple and the Government are appealing the ruling on the grounds that Apple’s tax treatment was in line with Irish and European Union law.
“The Government fundamentally disagrees with the ruling of the commission. However, as committed members of the EU, Ireland is intent on complying with our binding legal obligations in this regard,” Mr Donohoe said.
He said he expected the appeal was likely to begin in the autumn. “How long the hearings will last will depend on the judges overseeing it and could be open to either party after that to take any further actions.” The European appeals process may last up to four years.
The signing of the escrow framework deed on Tuesday allows for the appointment of the escrow agent or custodian and the investment managers. This, in turn, activates the process for the collection of the alleged State aid.
Bank of New York Mellon has been selected as preferred tenderer for the provision of escrow agency and custodian services in relation to the account while Amundi, Blackrock Investment and Goldman Sachs have been selected to manage the money.
Last October the commission said it was taking Dublin to the European Court of Justice over delays in recovering the money.
“This is the largest recovery fund of its kind ever to be established and due to the complexity of such, together with our duty to comply with EU procurement rules, it is taken some time to get to this point,” Mr Donohoe said.
In its original ruling, the commission found that two tax rulings made by the Revenue Commissioners offered Apple a selective advantage and this constituted illegal state aid.
Apple announced in January that it is to pay the US government $38 billion (€31 billion) in tax relating to money it is repatriating to the US. The payment comes on foot of new US tax legislation which is ending the ability of US companies to defer tax on cash held offshore.
The company is not expected to get a write-down in its US tax bill if the EU dismisses its appeal. – Additional reporting by Reuters