Value of Apple's escrow fund fell by €351m last year
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The value of the account holding the EU-ordered back taxes paid to Ireland by Apple fell by around €351m in 2021.
The fall is explained in the Comptroller and Auditor General (C&AG) report as being largely down to a withdrawal Apple made to pay tax in another country.
In August 2016, the European Commission ordered Ireland to recover from Apple the alleged State aid plus interest related to a 10-year period from 2003 up to 2014.
Ireland has appealed this decision, however, Government complied with the obligation to recover the sum of €13.1bn plus interest of €1.2bn.
Following an appeal by the Government, the European Court of Justice (ECJ) ruled in 2020 that Ireland had not favoured Apple in the way detailed by the European authorities. The European Commission subsequently said it would mount an ultimate appeal to that ECJ decision. A hearing on this appeal is expected in the coming months.
The C&AG report says the total net assets of the fund reduced in 2021 by €351m to €13.633bn, down from €13.984bn in 2020.
It says the reduction was "primarily due to a ‘third country adjustment’ amounting to almost €246m" and that the remaining €105m decline in value for the year reflects "the current negative interest rate environment and negative yields on highly rated euro sovereign and quasi-sovereign bonds, and fund operating expenses".
The Commission's ruling means that the amount in the account can be reduced if Apple is required to pay taxes in another jurisdiction on the same profits.
Such reductions are referred to as "third country" adjustments. The Finance Minister determines the validity of any third country adjustment applications made by Apple and in May last year, Paschal Donohoe gave the greenlight for Apple to be transferred €246m from the account.
The report says that the objective of the investment policy is to "preserve the capital value of the escrow fund to the greatest extent possible in light of the prevailing market conditions".
"The agreed risk appetite in respect of the escrow fund is ‘low’, with investments permitted only in securities that have a low degree of inherent risk, such as highly rated fixed income securities of short to medium-term duration.
The investment committee periodically reviews the ongoing appropriateness of the investment policy."