The Government has acknowledged the €13 billion award in the Apple tax case will have to be accepted by the State if its appeal against the European Commission ruling fails.

A briefing paper released by the Department of Finance said the Revenue Commissioners is now obliged to collect the €13 billion sum and it will be put into an escrow account.

If the appeal is successful, the money will be returned to Apple. However, if the commission’s decision is upheld, it has conceded “the sum will be paid to the Irish State”.

The paper does note that other states may have claims to some of the €13 billion, in what it describes as an “unprecedented” aspect of the ruling. The 16-page document has been prepared for all 158 TDs ahead of today’s debate on the appeal decision. The Dáil has been recalled three weeks early for a special sitting, set to last 10 hours.

‘Letters of comfort’

The document reveals more information on the ruling, including the formulas used by the Revenue Commissioners to calculate the operating expenses and profits of the two Irish-registered Apple subsidiaries under investigation.

These formed the basis of the 1991 and 2007 Revenue “opinions” or “letters of comfort” to Apple, setting out its liabilities under Irish tax laws.

According to the paper, the commission found Revenue’s opinion was that all expenses and profits that could not be attributed to the Irish “branches” of those companies were not taxable under Irish law.

Almost all sales profits recorded by the two subsidiaries were internally attributed to "head offices" outside Ireland.

The commission assessed that these “head offices” existed only on paper and could not have generated such profits. “These profits allocated to the ‘head offices’ were not subject to tax in any country,” it said.

‘Mismatch’

The commission found the “selective tax treatment” was illegal under EU state aid rules.

In the paper, the Department of Finance defends the actions as all occurring in accordance with Irish tax laws.

However, it does acknowledge there was a “mismatch” between the company residency rules in the US and Ireland, which resulted in the two Apple subsidiaries being “stateless” for tax purposes.

“The Irish part of this mismatch has since been addressed through legislative amendments to company tax residence rules,” it said.

There had been a suggestion that Revenue might not be in a position to demand the sum under Irish law, as there is a four-year statute of limitations for collecting liabilities from compliant taxpayers.

But, a Revenue spokeswoman said that “effect must be given to a final state aid decision of the European Commission, notwithstanding any obstacle under national law.”