The €14.3bn escrow fund set up by Apple and Ireland while an appeal takes place against the EU Commission's tax decision declined in value by €249m last year.
According to the Comptroller and Auditor General (C&AG) the value of the fund at 31 December 2019 totalled €14.02bn which represented a decline of €249 million since the end of 2018. The reduction is made up of adjustments of €209 million, tax charges of €3m and a €37 million fall in value due to the current negative interest rate environment and negative yields on highly rated euro-sovereign bonds.
The fund is predominately invested in short to medium-term sovereign and quasi-sovereign bonds. The fund is managed jointly by Apple and the National Treasury Management Agency (NTMA) on behalf of the Minister for Finance.
In 2016, the EU Commission said Ireland provided Apple with unfair tax incentives and ordered Apple to pay €13 billion, plus interest. However, both Apple and the government disagreed with the Commission’s decision and has brought an appeal before the European Courts which they won in July. However last week, the EU Commission said it would appeal the decision saying the General Court of the European Union made a number of "errors in law".
The appeal means the escrow account will remain in place and will continue to be managed by Apple and the NTMA.
According to the C&AG report the escrow fund had already fallen in value by €16m between May 2018, when it was set up and December 2018.
The adjustment of €209m to the fund last year is referred to as ‘third country’ adjustment. The EU said the fund can be reduced if Apple was required to pay taxes in another jurisdiction in respect of the same profits for the period covered by the decision. These adjustments are not dependent on the outcome of the legal proceedings in the European courts.