Ireland's debt agency has invested disputed taxes collected from Apple in low risk, highly rated euro-dominated fixed income securities, mainly short to medium-term sovereign and quasi-sovereign bonds, it said in an annual report.

The European Commission ruled in August 2016 that Apple had received unfair tax incentives from Dublin in breach of EU state aid rules and ordered Ireland to recover more than 14 billion euros, including interest, from the iPhone maker.

While Apple and Dublin are appealing against the ruling, saying the tax treatment was in line with Irish and EU law, Apple nevertheless had to hand over the full amount, pending the result of the appeal - which will likely take several years.

Ireland is holding the funds in an escrow account whose aim, the National Treasury Management Agency's (NTMA) annual report said, was to preserve capital to the greatest extent possible given prevailing market conditions.

The government said Irish taxpayers would be protected from any losses when setting up the fund. NTMA chief executive Conor O'Kelly said on Monday that the value of the fund was very likely to fall unless the interest rate environment changes.

"For example, at minus 50 basis points interest rate on average, which is close to the current portfolio's construction average, that would be a 5 million loss per billion, so that's a 70 million loss in value per annum," O'Kelly said at the launch of the annual report.

"But there is no loss to the state. Apple and Ireland have agreed that the pot is the pot, whatever is there at the end so we don't have to make up any difference. That's an agreed investment policy." (Reuters)

Source: www.businessworld.ie