As Deputies will be aware, in order to comply with the 2016 decision of the Commission, while the litigation process was ongoing, in 2018, the state aid identified by the Commission was placed by Apple into an escrow fund, with the proceeds to be released only when there had been a final determination in the European courts. A detailed confidential legal document, the escrow deed, was agreed to govern the operations of the fund both while the case was ongoing and following the final judgment from the European courts. Last week's judgment provides the final determination to allow the monies in the escrow fund to be released. As agreed, the full amount in the escrow fund will be transferred to Ireland over the coming months.
My officials are working closely with Revenue and the NTMA in the processes prescribed in the deed governing a release to Ireland. The final statements for the year 2023, published in July 2024, set out that the net assets of the fund as of 31 December 2023 totalled €13.77 billion. To date, we have generally only released this audited valuation of the fund on an annual basis. Given the finality of the judgment last week, I provided an update on this, with the fund having an unaudited value of approximately €14.1 billion at the close of business on 9 September 2024.
In its original state aid decision, the Commission noted there was a possibility other countries may seek to tax some of the profits the Commission was proposing to allocate to the Irish branches of the Apple companies. In that event, the Commission noted the amount of state aid would therefore be reduced from the headline figure it had proposed. The escrow arrangements took this possibility into account and a mechanism was agreed whereby, in the event of such claims, a payment out of the escrow fund could be made to Apple in order to account for the profits taxed in third counties and not therefore falling to Ireland. The making of these judgments was not dependent on the outcome of the legal proceedings in the European courts and could proceed ahead of any final determination.
Such third-country adjustments have taken place on two occasions since the establishment of the fund. A total of €209 million was returned to Apple during 2019. A further third-country adjustment took place in May 2021 for €246 million. A total of €455 million was paid out of the fund in third-country adjustments since 2019. I am not aware of any further claims which could arise if third countries claim taxes were due by these companies in their jurisdictions. The rules regarding how taxation for the period in question could be considered is a matter for individual jurisdictions to consider.
The Government is committed to identifying the most appropriate use for these funds to benefit the people of Ireland over the long term. The parameters for budget 2025 remain as they have been previously set out. That position has not changed. The appropriate use of these funds needs careful consideration. I and my colleagues in government are having these discussions. Whatever is decided, it is clear this must be treated as a windfall to the Exchequer and not to be used for day-to-day ongoing spending. The funds provide us with a real opportunity to invest in our future. We need to take the necessary time to agree and provide direction to that approach.
Since the judgment was delivered in this case, some commentary has questioned the value in taking this case to the European courts. It is suggested Ireland should have simply accepted the Commission’s decision and started spending the recovered money. This argument is not credible or honest for many reasons. On a practical level, Apple was already separately appealing this case and, given the quantum of the amount to be recovered, it is unlikely any prudent government would choose to proceed to spend the money in advance of the completion of the legal case. In fact, the money would have been held in escrow even without the involvement of the Irish State in the case. In addition to these practical considerations of whether this money would have been available to spend, there were important matters of principle that drove the decision to take the case, which remain valid despite the final judgment finding in favour of the Commission’s decision.
I reiterate that Ireland fully accepts the decision and is implementing the Court of Justice of the European Union's judgment, as we should. However, it was important Ireland defended its own tax regime and the legal principle of national tax sovereignty. While the European Court of Justice's judgment means the Commission’s decision stands, the importance of protecting the actions of Revenue and the operation of the Irish system remains as true now as at the start of the process.
I also note the Government has engaged with a range of legal and taxation experts both before taking the case and while the case was progressing. The advice remained consistent that there were clear arguments to be made in favour of Ireland’s position, as well as a possibility to win the case.
In addition, while the Apple state aid case was progressing through the courts, there were a number of fiscal state aid decisions from the Commission relating to different companies operating in different countries that were the subject of legal proceedings. Ireland intervened in a number of these cases in relation to underlying legal principles regarding the operation of state aid rules in the fiscal arena. The European Court of Justice's judgments in the cases helped to clarify points regarding the reference framework for identifying a tax advantage.
The judgment is not and should not be taken as a judgment against the Irish taxation system. The European Court of Justice's findings relate to the specific circumstances of a particular case. When it comes to those specifics, I wish to emphasise the Apple case involved an issue that is now of historical relevance only. The Revenue opinions at the heart of the case date back to 1991 and 2007 and are no longer in force. Ireland has already introduced many changes to the law regarding corporate residence rules and the attribution of profits to branches of non-resident companies operating in the State. I am not aware of any other live fiscal state aid investigations at this time.
The draft framework for international taxation has changed significantly in the last decade. Ireland is an active participant in international tax discussions and has also made the necessary changes to its taxation regime as international tax rules have developed over time. In the context of increased global, political and economic volatility, our approach to corporate tax continues to focus on stability and predictability, as well as competitiveness.
That applies both to domestic policy and international discussions and we believe it is the best way to support investment and economic growth. This is the context in which the Government decided in 2021 that Ireland should join the OECD global two-pillar agreement to address tax challenges arising from digitalisation of the global economy. While the agreement comes at a potentially substantial cost to Ireland in reduced tax receipts, we believe this is a price worth paying to bring certainty and stability to the global trading environment and to move away from the risk of fragmentation and trade wars, which would be so damaging globally and for Ireland in particular.
Ireland has been, and remains, fully committed to the ongoing work on international tax reform and to resolve global tax challenges. Ireland continues to be an active participant at OECD, EU and UN fora. Ireland recognises that taxation policy needs to reflect a changing, digitalised economy and this can only be achieved through multilateral co-operation, which is highly preferable to unilateral measures that destabilise global trade. We signed up to a two-pillar agreement with the OECD in October 2021 through the OECD-G20 Inclusive Framework on Base Erosion and Profit Shifting, BEPS, on a new framework to address the tax challenges arising from the digitalisation of the economy. Global implementation of the agreement will bring much-needed stability to the international tax landscape, providing a sound and stable platform for future investment. Ireland remains deeply engaged in the work to finalise pillar 1 of the OECD agreement and hopes to sign the amount A multilateral convention in due course. We are progressing plans to legislate for phase 1 of amount B and hope that phase 2 can be agreed shortly as part of the final pillar 1 package. Domestic legislation to implement pillar 2 to was introduced by transposing the EU minimum tax directive. The rules came into effect from 31 December 2023. Ireland was among the first in the world to implement the global minimum tax. We continue to support the adoption of balanced and sensible guidance at the OECD on important residual elements of the rules' practical implementation, for which guidance has not yet been agreed. Ireland has also supported development of the subject-to tax-rule, a treaty-based rule to protect source taxing rights of developing countries. Beyond the OECD agreement, Ireland has in recent Finance Acts fully completed the transposition of the anti-tax avoidance directives, introduced legislative defensive measures against listed jurisdictions through enhanced controlled foreign company rules, extended transfer pricing rules to the taxation of branches in Ireland, in line with the authorised OECD approach and introduced legislation for BEPS on mandatory disclosure rules, and transposed the EU minimum tax directive, implementing pillar 2 of the OECD agreement.
We have been comprehensively peer-reviewed twice regarding exchange of information on request and placed among a select group of countries in the top rank of compliance, with all ten essential elements of the international standard. In addition, Ireland has implemented six separate international administrative co-operation reforms that were set out in substantial amendments to the EU's directive on administrative co-operation, DAC. A further amendment to this regarding cryptocurrencies was unanimously agreed by member states in 2023. Transposition will take place in Ireland by 31 December 2025.
Ireland was an early adopter of the common reporting standard, participated fully in country-by-country reporting, legislated to allow for exchanges under the model rules for digital platforms and undertook to be among the first to begin exchanges under the crypto-asset reporting framework
Ireland has also been recognised as an active participant in related discussions at the UN, where we recognise its role in supporting and enhancing international tax co-operation. This work should be complementary and co-ordinated with ongoing work at the OECD. Not only has Ireland fully adopted international reforms, but we also took the initiative unilaterally where mismatch between our long-standing corporate tax rules and those of other jurisdictions created tax planning opportunities.
The past 15 years have brought extensive reforms of unprecedented ambition to international corporate taxation, transparency and co-operation and Ireland has been a fully committed and active participant in the vanguard of that reform. Ireland will continue to engage constructively in EU discussions regarding tax proposals, acting in a spirit of co-operation, while representing our perspective and interests.
The corporation tax roadmap, published in 2018 and updated in 2021, sets out the significant actions that Ireland has taken and will continue to take to ensure that our system remains competitive, fair and sustainable. The roadmap contains 11 commitments for further reforms, ten of which are now complete. Reflecting the ongoing global debate on taxation, the 2021 update provided further commitments to future action consideration and consultation. The transposition of the anti-tax avoidance directives was a key element of the roadmap commitments. These directives provide the basis for co-ordinated implementation by EU member states of anti-BEPS measures, primarily arising from the OECD base erosion and profit shifting project.
Following the signing into law of the Finance Act 2021, Ireland completed transpositions within all agreed deadlines as follows: a new exit tax and controlled foreign company rules were introduced in the Finance Act 2018 and our general anti-abuse rule already met the required standard; anti-hybrid rules were introduced in the Finance Act 2019; and anti-reverse-hybrid rules and an interest-limitation-ratio rule was introduced in the Finance Act 2021. These transpositions and other legislative actions taken in recent years represent a significant reform and modernisation of our corporate tax system, involving highly complex new legislation. Consultation and stakeholder engagement has been an important part of this process and the commitments included in the roadmap update envisage a continuing process of consultation and engagement to ensure effective implementation of the agreed reforms. Some commentary on the case has focused on potential impacts for the multinational sector. Much of the success of the economy in recent decades has been as a result of continued investment by the multinational sector and it remains an important priority for Government to encourage and develop this sector. The scale of investment is significant. At the end of last year, the stock of foreign direct investment stood at €1.3 trillion, up from €1 trillion at the end of 2019. This investment has driven exports, which have continued to display robust growth, increasing from €483 billion in 2019 to €671 billion last year.
Growth in international trade and investment has a significant impact, not only on GDP, which has more than doubled over the past decade, but importantly on the domestic economy and living standards of residents. Modified gross national income, an indicator designed to measure the domestic economy, has grown by 50% over this period, reaching €280 billion in 2023, underpinned by strong employment-rich investment.
Multinationals operating in Ireland make a significant contribution to the domestic economy through employment, with more than 300,000 people employed. In addition to supporting job creation, these companies also contribute significantly to knowledge spillovers, creating innovation potential for small and medium enterprises and the entrepreneurial ecosystem more generally in Ireland. Openness to trade and international investment has allowed Ireland to benefit greatly from globalisation over the past number decades, integrating itself firmly into global value chains. Sometimes the commentary on Ireland's success in the multinational sector can focus on our taxation regime. However, there is more to Ireland's offering than the tax rate. To support the growth of the multinational sector, complementing a competitive tax rate, Ireland will also continue to play to its traditional strengths, focusing on a forward-looking business environment, a whole-of-government approach to ensure we remain agile and competitive, and importantly, recognising the value of an educated and dynamic workforce who have consistently delivered innovation and profitability over many decades for businesses that have made Ireland their home.
This judgment marks the end of what has been a complex and long-running legal case. At all times, the advice received the Government was that there was a clear chance of winning the case. The argument for acting to protect our national tax sovereignty remains as valid today as it was when the case was first taken. Throughout the process, Ireland argued that there were no special deals for any taxpayers and this remains the position, notwithstanding our clear commitment to respect and implement the court's judgment. The judgment relates to a legacy issue. The current international taxation framework has changed on a global scale since the Commission's decision, with Ireland a committed participant in seeking to agree a way forward as the system continues to develop. We remain committed to our strategy of encouraging multinational investment in Ireland, recognising its positive impact across the economy. The ECJ's judgment means that the Exchequer will receive a significant additional amount in the coming months and work is under way to prepare for these transfers, identifying the best way to use these funds to support the Irish people now and into the future.