Apple agrees to pay Ireland €13bn in back taxes after European Union challenge

Apple agrees to pay Ireland €13bn in back taxes after European Union challenge

An escrow account is a temporary pass through account held by a third party during the process of a transaction between two parties.

However, last year, the Commission came to the ruling that this is an example of illegal state aid and threatened Apple with harsh consequences if it didn't cough up $13 billion in owed taxes. However, Dublin as well as Apple continue to contest the European Commission's ruling. After a year passed without Ireland moving to recover the money, the EU referred the country to the bloc's highest court, the European Court of Justice.

The Republic of Ireland has been giving Apple a sweetheart deal which has meant in many years the company has been paying an effective tax rate of 1% to as low as 0.005 percent, and the European Union has not been happy about it.

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While both have appealed the decision, the money Apple owes will be put in escrow while everything is being hashed out - but it will start being paid. In November, the now infamous "Paradise Papers" revealed that Apple has moved some of its operations to Jersey, a part of the Channel Islands near the coast of France.

We understand that some would like to change the tax system so multinationals' taxes are spread differently across the countries where they operate, and we know that reasonable people can have different views about how this should work in the future. We strongly support efforts from the global community toward comprehensive worldwide tax reform and a far simpler system, and we will continue to advocate for that.

Both Apple and the Irish government have appealed the ruling, but the position in the meantime is that the amount must be collected.

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