Apple owes Ireland 13 billion euros in back taxes, and the country must decide how to proceed.

• The European Union's top court has ruled in favor of Ireland, requiring Apple to pay 13 billion euros ($14.4 billion) in unpaid taxes.
• Irish lawmakers must determine how to allocate the upcoming cash infusion prior to the general election, which must occur no later than March 2023.
• Ireland is currently experiencing a budget surplus of several billion euros, largely due to the robustness of corporate tax revenues.

The European Union's top court has ruled in favor of Ireland, ordering Apple to pay 13 billion euros ($14.4 billion) in unpaid taxes.

Irish lawmakers will have to determine how to allocate the incoming funds before the general election, which must take place no later than March next year, leaving the small EU member state in a politically awkward yet advantageous position.

The European Court of Justice (ECJ) ruled on Tuesday that Apple must pay billions of euros in back taxes.

The decision was hailed as a "huge win" for European citizens by both tax justice advocates and the outgoing competition chief, Margrethe Vestager.

Apple expressed disappointment with the ruling, while the Irish government characterized the case as a matter of historical significance only.

The Irish government has always maintained that it does not provide preferential tax treatment to any companies or taxpayers. Now, a spokesperson announced that the process of transferring the assets held in an escrow fund to Ireland will begin.

Aidan Regan, an associate professor of political economy at University College Dublin in Ireland, stated via telephone to CNBC that the Irish government is now in a position where they have been telling the Irish people and the international community that they don't want the 13 billion euros they received as part of the EU bailout.

Politically, they face numerous domestic pressures, including an upcoming election in a few months, while also receiving a potential windfall of 13 billion euros. However, this comes at a time when there are significant infrastructural problems and a housing crisis.

"I believe the Irish government will prioritize domestic issues and disregard international events, potentially facing criticism from the electorate before the upcoming election."

The Finance Ministry's spokesperson directed CNBC to the government's official statement when requested for comment.

A lucrative decision

Apple's European headquarters, located in Ireland, boasts one of the lowest corporate tax rates among the 27 nations of the EU.

Ireland has long maintained that Apple should not be required to repay unpaid taxes to the country, citing concerns that doing so may harm the country's ability to attract investment from companies looking to minimize their tax liability on foreign earnings.

The ECJ ruled on Tuesday that Ireland must recover the "unlawful aid" granted to the U.S. tech giant in 2016.

Ireland is currently experiencing a budget surplus of several billion euros, largely due to the robustness of corporate tax revenues.

Robert Dever, tax partner at Pinsent Masons, stated via email to CNBC that the decision is advantageous for Ireland, bringing in a substantial benefit to the country, but contradicts the government's longstanding stance that Ireland does not offer preferential tax treatment to any taxpayers or companies.

Dever stated that it is hoped that any harm to Ireland's international reputation will be minimized due to recent changes in the Irish tax code, including the rules regarding corporate tax residency and the allocation of profits to branches of non-resident companies.

The transfer of assets from the escrow fund, which holds the funds representing the tax liability and interest owed by Apple, to Ireland will begin following today's judgment. However, it will take several months to complete the process.

Tax cooperation

On Tuesday, Alex Cobham, CEO of the Tax Justice Network, expressed his welcome for the ECJ's ruling on Apple's tax affairs in Ireland.

Cobham stated via email to CNBC that the ruling underscores the inadequacy of international tax rules in safeguarding the right of countries to tax economic activities within their borders.

He emphasized the urgency of the global reform process being implemented through the negotiation of a UN framework convention on international tax cooperation.

On Tuesday, Chiara Putaturo, an EU tax expert at Oxfam, stated that the ECJ's ruling exposed the close relationship between EU tax havens and multinationals.

Putaturo stated that this ruling should not be viewed as a solitary triumph; rather, it necessitates the EU's closure of all tax loopholes that enable corporations to evade their fair share of tax.

"It is imperative to allocate the revenue from draining government coffers towards combating the climate crisis and providing essential services such as hospitals, schools, and other facilities for the people."