Irish Said to Face Rebuke for Slow Recovery of Apple Cash

(Bloomberg) -- Ireland faces a rebuke from European Union authorities for failing to collect a year-old tax bill of as much as 15 billion euros ($17.6 billion) from Apple Inc.

The European Commission may issue a so-called non-compliance action as soon as this week, according to a person with knowledge of the matter, who asked not to be named because the information is private. The EU has pushed Ireland to collect the money, which was initially due by Jan. 3.

In an order that reverberated across the Atlantic, the commission last year slapped Apple with a multibillion-euro bill, saying Ireland granted unfair deals that reduced the company’s effective corporate tax rate. Apple and Ireland are appealing the decision.

Once it’s collected, Irish authorities will place the money in an escrow account pending an appeal. If the appeal, which could take as long as five years, is successful, the money will be returned to Apple. The government is seeking managers to invest the money while the appeal is going on.

The Irish finance ministry and an EU spokesman declined to comment. A spokeswoman for Apple couldn’t immediately comment.

If the commission considers an EU state has failed to implement a recovery order in a state aid case, regulators can sue at the bloc’s courts in Luxembourg. Judges would then rule on the alleged non-compliance and can issue a fine.

Escrow Account

In the Apple case, part of the delay may stem from negotiations over the terms of the escrow account, as Ireland sought an indemnity to make sure it isn’t liable for any drop in the value of the fund while the case winds its way through the EU courts. In the end, it was agreed that Ireland and Apple will jointly choose investment managers, a decision which could sidestep the need for a formal indemnity.

The EU is targeting what it views as unfair tax practices that give a selective advantage to some companies to attract their business and the jobs attached. The same team is poised to rule on one of the cases against Amazon.com Inc. and McDonald’s Corp. in the coming weeks, according to three people familiar with the cases who spoke on condition of anonymity. Competition watchdogs are also weighing a more general crackdown on special tax deals that EU countries offer big corporations.

The EU Commission “is maybe reaching the end of the beginning of the process, but certainly not the beginning of the end,” Gert-Jan Koopman, the authority’s deputy director-general for state aid, said Sept. 26 at a conference in Brussels. He called the crackdown a “long-term, crucial priority.”

--With assistance from Gaspard Sebag

To contact the reporter on this story: Dara Doyle in Dublin at ddoyle1@bloomberg.net.

To contact the editors responsible for this story: Vidya Root at vroot@bloomberg.net, Anthony Aarons, Giles Turner