Apple reached an agreement with the European Union today (Dec. 5) to begin paying €13 billion ($15.46 billion) to the Irish government. That’s 5.9% of the tech giant’s total cash pile as of August 2017, when it reported reserves of $261.5 billion.
The agreement suggests that the European Union is slowly winning a long dispute it has held with Apple and Ireland. Since the early nineties, Apple has enjoyed an agreement with Ireland that requires it to pay tax rates as low as 0.005%, which originated as part of Ireland’s attempt to spur foreign investment.
The European Union, however, has argued the arrangement is a sweetheart deal that has allowed Apple to dodge taxes in other EU member states, by funnelling profits over to two Irish subsidiary companies. In 2016, the European Commission ruled that the arrangement is “illegal under EU state aid rules.”
Both Ireland and Apple have dragged their feet on complying with the ruling. Apple CEO Tim Cook called it “total political crap,” and both Apple and Ireland have appealed it. In October, the European Commission took the case to the European Court of Justice, the EU’s highest judiciary body, in hopes of coercing Apple and Ireland to cooperate.
Despite today’s agreement, Apple’s appeal remains in process, and its tax payments to Ireland will remain in escrow until that’s exhausted. “We have a dedicated team working diligently and expeditiously with Ireland on the process the European Commission has mandated. We remain confident the General Court of the EU will overturn the Commission’s decision once it has reviewed all the evidence,” Apple told the Wall Street Journal (paywall).