Apple starts paying off its massive $16 billion European tax bill

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Big pile of cash underneath an Apple logo.
Apple's payment means EU will drop may drop its lawsuit against Ireland.
Photo: Ste Smith/Cult of Mac

Apple has transferred the first 1.5 billion euro ($1.18 billion) installment of its $16 billion fine ordered by the European Union, reflecting back taxes the company supposedly hasn’t paid.

The payment was confirmed today by Ireland’s Finance Minister Paschal Donohoe. In response to Apple paying up, EU authorities are reportedly open to dropping a lawsuit against Ireland for failing to do more to chase Apple’s debt.

The European Commission ordered that Apple pay the sum in August 2016. It reflects a so-called sweetheart deal under which Apple allegedly received favorable tax rates in the hopes that this would attract its business in the country.

Due to its failure to chase the debt, European Commissioner Margrethe Vestager stated her intention to take Ireland to the European Court of Justice in October last year. “We understand that recovery in certain cases maybe more complex than in others, and we are always ready to assist,” she said. “But [EU] member states need to make sufficient progress to restore competition.”

Apple vs. European Union

In the event that Ireland was found guilty by the European Court of Justice, the country was liable to face fines. Ireland has argued that it acted as fast as it could to facilitate the collection and management of Apple’s payment.

“We continue to be in close contact with the Irish authorities and hope that recovery of the illegal aid is completed in full as soon as possible,” the EU’s press service said Friday. “That would also allow us to close the ongoing procedure before the EU Court of Justice against Ireland for not having implemented the Commission decision of August 2016.”

The money paid by Apple is being held in a low-risk escrow account managed by Amundi, BlackRock Investment Management and Goldman Sachs Asset Management. A court case to determine whether Apple actually owes the money will begin later this year.

Source: Reuters and Bloomberg