Apple’s announcement that it will pay $38bn (€31bn) in US tax on its overseas cash will not reduce the $16bn tax bill the company owes the Government here following an EU ruling, the European Commission has said, writes Julia Fioretti.

“Nothing has changed,” said a spokesman for the commission, with regards to its 2016 ruling Apple received illegal state aid in Ireland through sweetheart tax deals with the Government.

At the time of the ruling, the commission said the amount Apple would have to pay to Ireland could be reduced if other countries found the company should have recorded its sales there instead of Ireland, or if its European subsidiaries were to pay more tax to the US parent company.

However, Apple’s announcement earlier this week that it would pay about $38bn in one-time US tax payments on its overseas cash do not fit either of these criteria.

“The commission’s 2016 state aid decision found that, over many years, tax rulings issued by Ireland had allowed Apple to pay less tax on profits recorded in Ireland than other companies subject to [the] same national taxation laws. This gave Apple an illegal advantage in breach of EU state aid rules, which must now be recovered by Ireland — nothing has changed in that regard,” said the commission spokesman.

The commission ordered Apple to pay Ireland up to €13bn in August 2016 and has since taken the Government to court over its delays in recovering the money.

A spokesman for the Department of Finance said it had no indication the US tax payment would affect its recovery of the money.

“Ireland has an obligation to recover [money] that is binding under EU law. Changes to US legislation do not alter such an obligation,” the spokesman said.

The Government and Apple are, however, appealing the ruling. Apple had unveiled a $30bn US investment plan and said it would pay about $38bn in foreign cash taxes.

It is unclear whether Apple will be able to offset the Irish tax bill against the 15.5% US tax on offshore tax piles. The corporate tax cuts US president Donald Trump unexpectedly got passed into law much earlier than many had thought, came into effect this month.

It cut the headline rate of the US federal corporate tax to 21%, and significantly, for the many US tech giants, including Apple, that hold trillions in cash in offshore centres, imposed a repatriation tax, of 15.5% on the cash hoards.

Reuters and Irish Examiner