Apple to Begin Paying $16 Billion to Ireland Around March Amid Legal Battle With European Commission

Ireland will begin collecting €13 billion from Apple around March, with payments expected to continue through September, according to Irish broadcaster RTÉ via Cult of Mac.

Derek Moran, the Secretary General of Ireland's Department of Finance:
"However, identification of the escrow agent/custodian by the end of March 2018 will then allow for a payment into the escrow fund account, with payments continuing through the course of April, May and June and up to the end of September 2018".
The money will be held in an escrow account while both Apple and Ireland continue to battle the European Commission, which in August 2016 ruled the iPhone maker received illegal state aid from the country, and ordered the Irish government to collect up to 13 billion euros—nearly $16 billion currently—in back taxes.

Ireland is required to collect the money until the legal process is completed, according to the report. Apple has previously said the money will be reported as restricted cash on its balance sheet once it begins making payments.

The premise is that the Irish government gave Apple unfair advantage between 1991 and 2007 by allowing the company to move income from the European market through two "non-resident" head office subsidiaries based in Ireland, but Apple says the European Commission made "fundamental errors" in its findings.

Apple CEO Tim Cook has called the decision "total political crap" and said Apple pays all of the taxes it owes based on the laws of each country in which it operates. Likewise, the Irish government said it did not give favourable tax treatment to Apple and added that it "does not do deals with taxpayers."

Apple expects its appeal with the European Union's highest courts to take several years, but ultimately expects the European Commission's decision to be overturned, in which case the €13 billion would be returned to the company.

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E.U. to Take Ireland to Court For Failing to Claim Apple Tax

The European Commission said on Wednesday it will take Ireland to court for its failure to recover up to 13 billion euros ($15.3 billion) of tax due from Apple (via Reuters). Apple was ordered to pay the unpaid taxes in August 2016 after the Commission ruled that the company had received illegal state aid.

The Commission argued that Irish revenue commissioners gave Apple unfair advantage between 1991 and 2007 by allowing the company to move income from the European market through two "non-resident" head office subsidiaries based in Ireland. Ireland vowed to appeal the ruling.
“More than one year after the Commission adopted this decision, Ireland has still not recovered the money,” EU Competition Commissioner Margrethe Vestager said, adding that Dublin had not even sought a portion of the sum.

“We of course understand that recovery in certain cases may be more complex than in others, and we are always ready to assist. But member states need to make sufficient progress to restore competition,” she added.

The Commission said the deadline for Ireland to implement its decision had been Jan. 3 this year and that, until the aid was recovered, the company continued to benefit from an illegal advantage.
Ireland's finance ministry said it had never accepted the Commission's analysis in the Apple state aid decision, but would collect the money due pending Dublin's own appeal of the ruling.

"It is extremely regrettable that the Commission has taken this action, especially in relation to a case with such a large scale recovery amount," the ministry said in a statement.

Apple claimed earlier this year that the Commission made "fundamental errors" when it ruled that the company owed Ireland the unpaid taxes plus interest, and argued that the profits to those activities were attributable to the United States.

Apple CEO Tim Cook has called the EC's ruling "total political crap" and described the lower end 0.005 percent tax rate Apple is accused of paying as a "false number". The Apple CEO has previously said he believes the decision will be reversed.

In addition, Vestager announced a demand for Amazon to pay around 250 million euros in taxes to Luxembourg. Amazon denied it owed any back tax, and claimed it had not received any "special treatment" from Luxembourg.

"We will study the Commission's ruling and consider our legal options, including an appeal," an Amazon spokesperson said.

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Report Says U.S. Government Filed to Intervene in Apple’s Tax Appeal in Europe

The U.S. government has filed an application with the General Court of the European Union to intervene in an ongoing tax-related case between Apple and the European Commission, according to Reuters.
"I can confirm the United States filed an application with the European Union General Court to intervene in the case involving the retroactive application of state aid rules to Apple," said the source, who declined to be named because of the sensitivity of the matter.
The report did not specify when the application was submitted, so it's unclear if it occurred under the Barack Obama or Donald Trump administrations.

Last August, following a three-year investigation, the European Commission found Apple received illegal state aid from Ireland. The iPhone maker allegedly paid between 0.005 percent and 1 percent in taxes in Ireland between 2003 and 2014, compared to the the country's headline 12.5 percent corporate tax rate.

The European Commission ordered Apple to pay up to 13 billion euros to Ireland in back taxes as a result of its decision.

Apple appealed the case in December, arguing that the European Commission made "fundamental errors" by failing to recognize that its "profit-driving activities," in particular the development and commercialization of intellectual property, were controlled and managed in the United States.

Ireland has also appealed the case, denying that it gave any favourable tax treatment to Apple. In a statement, the Irish government said the full amount of tax in the case was paid by Apple, adding that no state aid was provided. "Ireland does not do deals with taxpayers," the country said.

Apple's top lawyer Bruce Sewell earlier said the company is a "convenient target" because it "generates lots of headlines," allowing European commissioner Margrethe Vestager to become "Dane of the year" for 2016.

The report, citing a source with knowledge of the matter, said the General Court is expected to hear the case in late 2018.

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