Not So Rotten After All: Reassessing Apple

This piece has no ambition to “break” well-settled, and often very emotionally defended, opposing views. Nor does it take any moral stance against anyone’s tax planning, irrespective of its occasional (and admittedly somewhat childish) implausibility. It is simply an invitation to gently revisit a legal narrative that, in my view, has been unduly biased against the work of the Commission and the EU Courts. The article argues that Apple is not really about reallocating taxing rights between sovereign states, nor about grand theories of value creation or IP control. It is, more quietly, about something more technical and perhaps less fashionable: the internal coherence of the Irish tax system as applied, and the consistent application of section 25 TCA once Apple’s own structural choices are taken as given. Put simply, profits recorded in Ireland, where ASI and AOE were incorporated, could not be reduced through a fictitious allocation to “head offices” with no residence, no personnel, and no real activity. In that respect, the Court’s move was rather restrained: it took Apple at its word. Having accepted the structure Apple itself put in place, the Court simply refused to allow form and substance to be invoked selectively, depending on which tax authority happened to be in view. What is striking is that, after having gone to great lengths to insulate those profits from U.S. taxation, Apple was ultimately willing to invoke alleged powers of attorney granted to U.S. personnel, effectively reopening the door to U.S. tax exposure, solely to demonstrate that the Commission was wrong, even though the Commission had been open from the outset to any downward Irish adjustment being matched by a corresponding upward adjustment in the United States. Consistency, in other words, was the one thing the Court was not prepared to trade away.