Three Bites of the Apple

This article responds to the so-called “second bite” and revisits what the case was, and was not, about. Our argument is straightforward. Apple was never a seminar on U.S. worldwide taxation. It was about something narrower and more disciplined: whether Ireland could coherently apply its own corporate tax rules to profits recorded in Irish-incorporated companies. The Commission, and ultimately the Court of Justice, did not misunderstand the U.S. system. They simply refused to let speculative future shareholder-level taxation displace the Irish reference framework. There is also a gentle clarification that “maybe the IRS will tax it someday” is not a legal category and an insistence that transfer pricing has elasticity, but not infinite elasticity: it allocates value among real functions and risks; it does not conjure substance where none exists. If profits are recorded in Ireland and the “head office” has no office, no people, and no pulse, at some point even metaphysics runs out of transfer pricing arguments.