One of the companies in Ireland is Apple Operations International; a holding company without employees or activity. Internationals sales are transferred to this company which serves as a financing company for Apple - also referred to as a treasure chest.
In the US Apple did pay takes from whatever was transferred from Ireland. Now the EU has reacted and claims that Apple has made an illegal deal with Ireland; calling it "illegal Irish state aid".
Apple is not the only company with this kind of tax planing so companies like Starbucks and Fiat should be worried too.
So far, the focus is on three separate cases – Ireland's treatment of Apple, the Netherlands' arrangement with Starbucks, and Luxembourg's treatment of Fiat
It is hard to see how these companies have done anything wrong - the EU must be criticising Ireland, The Netherlands and Luxembourg here and not the companies that have struck the deal.
Apple claims that they have accepted a deal from the Irish in a situation where they wanted to recruit Tech companies.
Apple boss Tim Cook told the US Senate under oath last year that agreements had been struck by the company's founder Steve Jobs in Dublin in the 1980s. Cook said Ireland was "very much recruiting tech companies" and "did give us a tax incentive agreement to enter there"
Since Apple is a big employer in Ireland the Irish government will fight this and maintain that they have not breached the EU state aid regulations.
Apple, which is now the second biggest employer in Cork, where its international headquarters are based, says it pays all taxes due. Commission experts say it paid just 3.7% tax on non-US profits of $31bn last year. The Irish government has rejected suggestions of a special deal with Apple. Dublin said it was confident that Ireland had not breached state aid rules and would defend its position vigorously
Anyone with a deal that is to good to be true should be worried, the EU has set out to make sure that the taxes are paid where the revenues are made and not:
..allow profits to be shifted from the country where the revenues are generated to another where corporation tax rates are lower.