Apple's disputed Irish tax account loses $1 billion

AppleInsider

While the EU continues to appeal against Apple's tax deal with Ireland, alleged back taxes have been held in escrow -- but the fund is shrinking.

Apple Ireland

Apple's on/off dispute with the EU over its tax payments in Ireland is still continuing, with a 2016 ruling going against Apple, and a 2020 one backing up the company. As the European Commission is taking the case to the Court of Justice of the European Union, the money Apple may owe in back taxes is being held in an escrow account.

The amount was 14.3 billion euros ($12.25 billion), but it shrank by 16 million euros in 2018. Now according to The Irish Times, the amount being held has fallen again -- and dramatically.

In the last year, the fund's value declined by some 259 million euros ($283 million). Together with the 2018 loss and all years in between, the account now contains under 13.4 billion euros, for a decline of almost a billion euros.

Some 6 million euros ($6.5 million) of the decline in the last year is said to be down to operating expenses. Those are presumably annual, but there are two more major reasons for the decline.

One is the escrow account consists chiefly of investments rather than cash, and European bonds have been seeing negative rates.

However, the other reason is according to The Irish Times, Apple is allowed to take money out of the escrow account in order to pay tax in other jurisdictions. It's not clear what the jurisdictions are, or whether there are limitations on what Apple can withdraw.

The dispute stems from how Ireland used to allegedly be a tax haven for multinational corporations. That has ended since this legal battle began, with Ireland signing up to an international Organization for Economic Cooperation and Development tax agreement in 2021.

Ireland has maintained throughout the entire process that Apple paid what it owed, legally, and properly.

Read on AppleInsider

Xed

Some 6 million euros ($6.5 million) of the decline in the last year is said to be down to operating expenses. 

$6.5M per annum in operating expenses to not touch money. That tracks. 🙄

chutzpah

Great, another dodge.

chasm

To be clear about this, Ireland is 100 percent correct in its view that this is really a dispute between Ireland and the EU that doesn’t actually involve Apple — because Ireland made similar deals to other multinationals you *never hear about*, such as Starbucks.

Ireland won its appeal, which means that the court viewed the deals as legal at the time they were made. Apple is only being singled out because it has the deep pockets to be able to escrow the amount the EU thinks should have been charged.

And now the escrow account is being mismanaged — by the EU. I’m generally pro-EU but if the fund losing money isn’t a metaphor for this entire folly of a case, I don’t know what is.

avon b7

chasm said:

To be clear about this, Ireland is 100 percent correct in its view that this is really a dispute between Ireland and the EU that doesn’t actually involve Apple — because Ireland made similar deals to other multinationals you *never hear about*, such as Starbucks.

Ireland won its appeal, which means that the court viewed the deals as legal at the time they were made. Apple is only being singled out because it has the deep pockets to be able to escrow the amount the EU thinks should have been charged.

And now the escrow account is being mismanaged — by the EU. I’m generally pro-EU but if the fund losing money isn’t a metaphor for this entire folly of a case, I don’t know what is.

Apple definitely wasn't singled out for its deep pockets. 

Back in 2016 when the three year investigation was coming to an end, it was revealed that the taskforce investigating Apple had around 300 companies in its files for the same reasons. Apple was simply the biggest case among those and got all the attention. 

radarthekat

It will be a grand day when that money, whatever is left of it, falls back into Apple’s coffers.  It won’t change the world, or even the stock price, much, but a modicum of rationality will have been restored to the world. 

timmillea

I cannot imagine why some think it is fine for trillion dollar companies pay1-2% marginal tax when poorer members of society starting out in the jobs world pay marginal rates of tax approaching 70%, e.g those paying income tax, national insurance and repaying their student fees. These companies' behaviour needs be reined in across all jurisdictions. If they make a profit, they must pay fair tax. If they make a loss, let them go bust. 

Xed

timmillea said:

I cannot imagine why some think it is fine for trillion dollar companies pay1-2% marginal tax when poorer members of society starting out in the jobs world pay marginal rates of tax approaching 70%, e.g those paying income tax, national insurance and repaying their student fees. These companies' behaviour needs be reined in across all jurisdictions. If they make a profit, they must pay fair tax. If they make a loss, let them go bust. 

1) Paying back a student loan is not a tax.

2) I'm curious how you are in a 70% tax for the poorest people in society. I was in the highest income tax bracket in a state with a state income tax, and that never was near over 50% at the highest end of the pay scale.

3) I don't like how companies are taxed v the populace, but that's what's happens when you have corporations with deep pockets paying lawmakers to make rules that benefit where their money is coming from. I guess my only advice would be to run for office and change the laws that affect the little guy.

nubus

chasm said:

And now the escrow account is being mismanaged — by the EU.

The fund is managed 50/50 by Apple and Ireland. Investment profile, costs... all with Apple and Ireland.
https://www.gov.ie/en/publication/47f7d-cover-note-for-ireland-apple-escrow-fund-2022-financial-statements/