Cover note for Ireland Apple Escrow Fund 2024 Financial Statements

Background

The Ireland Apple Escrow Fund (the Fund) was governed by the Escrow Framework Deed, which was signed by the Minister for Finance, Apple Sales International Limited and Apple Operations Europe Limited (AOE)[1] on 24 April 2018. The Escrow Framework Deed set out the detailed legal agreement regarding the recovery of the alleged State aid, following the European Commission Decision of 30 August 2016 (Decision C(2016)(5605)), and the framework for oversight, safekeeping and management of the Fund.

The Minister for Finance delegated certain of his functions in relation to the Fund to the National Treasury Management Agency (NTMA) by way of orders issued pursuant to Section 28 of the National Treasury Management Agency (Amendment) Act 2000 (NTMA Act 2000). These functions included inter alia:

• the conduct, in conjunction with Apple, of the procurement processes for escrow agent and custodian services, and for investment management services;
• the negotiation and execution of, and performance of obligations under the escrow agent and custodian agreement;
• the negotiation and execution of, and performance of obligations under investment management agreements;
• the approval of amendments to the investment policy from time to time;
• the appointment of the Ireland members of the investment committee and other rights and obligations in relation to that committee;
• the oversight of the investment and management of the Fund;
• the preparation and issuing of certain release instructions; and
• the approval of Fund operational procedures.

The financial statements of the Fund are prepared pursuant to Section 28(5) of the NTMA Act 2000. The Minister has directed that the NTMA prepares and keeps accounts for the Fund on the basis of the International Financial Reporting Standards (IFRS) accounting standard. The accompanying financial statements are the fulfilment of this direction.

Performance of the Fund

The investment policy for the Fund was agreed by the Minister for Finance and Apple. The Fund was managed by three investment managers, with the Investment Committee for the Fund responsible for monitoring performance and investment oversight. The Investment Committee for the Fund comprised an equal number of members from the NTMA and Apple.

The investment policy established the investment principles and parameters for investment of the Fund, which informed the mandates that the investment managers were required to adhere to. The investment objective was to preserve capital to the greatest extent possible in light of the prevailing market conditions. In addition, the Fund was managed in a manner designed to ensure adequate liquidity was maintained to meet liabilities in respect of the payment of fees and expenses, and in relation to all releases to be made from the Fund.

For these reasons, the risk appetite in respect of the Fund as specified in the investment policy was "low", with investment permitted only in highly rated euro-denominated fixed income securities. The Fund was predominately invested in short to medium-term sovereign and quasi-sovereign bonds. The Investment Committee monitored the performance of the investment managers and the ongoing appropriateness of the investment policy.

Timeline on the Fund

In compliance with the 2016 European Commission Decision, in 2018 Ireland recovered the then alleged State aid (including relevant EU interest), which was placed by Apple into the Escrow Fund with the proceeds to be released when there was a final determination in the European Courts on the validity of the European Commission Decision. The amount transferred into the Escrow Fund included the principal amount of State aid to be recovered by Ireland and relevant EU interest payable on that principal amount. This amount was subsequently reduced to reflect certain ‘third country adjustments’ paid out of the Fund in 2019 and 2021 pursuant to the Escrow Framework Deed.

On 15 July 2020, the General Court of the European Union (GCEU) issued its judgment annulling the Commission’s Decision, finding in favour of appeals taken by each of Ireland and Apple. On 25 September 2020, the European Commission announced its decision to appeal GCEU’s judgment to the Court of Justice of the European Union (CJEU). On 23 May 2023 the CJEU held the oral hearing of the European Commission’s appeal.

The final judgment of the CJEU in September 2024 set aside the 2020 GCEU judgment which had annulled the European Commission’s Decision. Therefore, the European Commission’s 2016 Decision that Ireland provided unlawful State aid to Apple stands.

The CJEU judgment provided the final determination required to trigger the release of the Fund from escrow and the transfer of all Fund assets to Ireland to complete the recovery of the State aid and relevant EU interest, in line with the processes set out in the Escrow Framework Deed.

Following the CJEU’s judgment on 10 September 2024, and the issue of tax assessments by the Revenue Commissioners, funds were therefore released from escrow and transferred to the Revenue Commissioners in the manner prescribed in the Escrow Framework Deed to pay the relevant tax liability. This involved the transfer of €12,677m to the Revenue Commissioners, for onward transfer to the Exchequer.

The balance remaining in the Fund following such payments, consisting of EU interest and gains to the fund, was transferred to an account of the Minister held at The Bank of New York Mellon, London Branch (BNY) as custodian (the Account) on 24 January 2025. The investment management arrangements in relation to the Fund were terminated with effect from 27 January 2025.

Following receipt of proceeds arising on the maturity of securities transferred to the Account, and after all fees and operational expenses were paid, the balance of the Fund held in the Account was transferred to the Exchequer on the direction of the Minister by means of a number of cash transfers, with the final such transfer taking place on 9 May 2025 (the “Final Transfer”). The total amount of such transfers was €1,567m. The Account was closed with effect from 13 May 2025 with no assets remaining in the Account.

The Fund (including the balance transferred to the Account on 24 January 2025) have all now been transferred to the Exchequer in the manner prescribed in the Escrow Framework Deed. On this basis the financial statements published today are the final such statements.

• On 2 April 2023, AOE merged with its Irish incorporated parent company, Apple Operations International Limited (AOI). Pursuant to the merger, all of AOE’s assets transferred to AOI, and AOI assumed all of AOE’s rights, obligations and liabilities, by operation of law with effect from 2 April 2023. AOE was thereby dissolved without going into liquidation.