Extended Background

The tech industry’s rapid globalization spotlighted the use of low-tax jurisdictions within the EU—none more famous than Apple’s “stateless” Irish structures. By routing European profits to Irish holding companies without substantial local operations, Apple minimized its overall tax bill. This was standard practice before aggressive state aid enforcement and OECD intangibles guidance became mainstream.

Detailed Arguments

Taxpayer

• Asserted full compliance with both Irish tax law and OECD guidance at the time.

• Claimed no special deal or privilege was secured, and that all arrangements were open to other companies as well.

Tax Authority (European Commission)

• Charged that Ireland had granted unlawful state aid by offering advantages unavailable to other companies.

• Focused on the lack of any staff, business activity, or real presence in the Irish "head offices."

Court Reasoning

• Found Apple's profits artificially shifted to entities lacking substance and staff.

• Determined that Ireland's system selectively conferred benefits, violating EU state aid rules.

Procedural Journey

• Began with a comprehensive EC investigation, followed by a formal EU state aid decision.

• Led to a record-breaking €13B assessment, and subsequent litigation in the Court of Justice of the European Union (ongoing as of writing).

Implications Beyond the Case

• Forced all digital economy giants to revisit their holding structures and reassess risk exposure to both anti-abuse and substance-over-form rules.

• Triggered further state aid probes and led to EU-wide reforms in tax ruling transparency and anti-avoidance measures.

• Lesson: MNEs must ensure that profit allocation aligns with real business activity—and cannot rely solely on domestic interpretations where profits are reported.

Original Case Link:

CJEU Apple ruling (PDF)