However, Heather Self, a tax specialist at Pinsent Masons, the law firm behind Out-Law.com, said apparent deficiencies in the practices deployed by Ireland's tax authority would make it more challenging for the country and the company to win an annulment of the Commission's "bold decision".
Ireland and Apple both published their own legal arguments as the Commission published its full decision on the case this week.
The Commission said in August that Ireland must recover the unpaid taxes from Apple after it concluded that the country granted undue tax benefits to Apple between 2003 and 2014.
"This is illegal under EU state aid rules, because it allowed Apple to pay substantially less tax than other businesses. Ireland must now recover the illegal aid," the Commission said at the time.
However, the Irish government said that the Commission has "misunderstood the relevant facts and Irish law".
"Ireland did not give favourable tax treatment to Apple - the full amount of tax was paid in this case and no state aid was provided. Ireland does not do deals with taxpayers," it said.
Self said: "Overall this is a bold decision by the Commission helped by poor facts and poor practice on the part of both Apple and Ireland."
The Commission's decision followed a three year investigation into two rulings issued by Ireland in favour of two Apple group companies: Apple Sales International (ASI) and Apple Operations Europe (AOE). These companies were both incorporated in Ireland and, although they did not have any taxable presence in the US or any other tax jurisdiction, they were not treated as Irish tax resident because Irish law at the time regarded them as US tax resident. The Irish law has since been amended and Apple has now changed its operating structure.
The tax rulings concerned the method of allocation of profit to the Irish branches of these companies. The rulings meant that almost all of the sales profits recorded by the two companies were internally attributed to a head office of ASI that the Commission said, in a statement issued in August, "existed only on paper and could not have generated such profits". The profits allocated to the head office were not subject to tax in any country and as a result, the Commission said Apple only paid an effective tax rate of between 0.005% and 1%.
"The Commission is bold in looking beyond Ireland and questioning whether the US head office has any substance," Self said. "Apple was very aggressive in allocating entrepreneurial profit to 'stateless' entities, so the profits were apparently not taxed anywhere."
In its full decision published this week, the Commission observed that no profit allocation or transfer pricing report prepared by Apple was available to Irish Revenue when examining the ruling requests. It said that it was only after the Commission adopted its opening decision that Ireland and Apple each produced "ad hoc profit allocation reports to justify the profit allocation methods endorsed by the contested tax rulings" after the event.
"Ireland's ruling practice appears to have been extremely relaxed," Self said. "The absence of a formal transfer pricing study is very surprising and does not help Apple or Ireland's arguments."
The Commission said that the acceptance by the Irish Revenue authorities of operating expense as a profit level indicator in the profit allocation methods endorsed by the rulings, instead of sales for ASI’s Irish branch and total costs for AOE’s Irish branch, "inappropriately" lowered the annual taxable profit of both companies compared with independent companies operating at arm's length. It therefore constituted a "selective advantage", it said.
The Commission said that the tax ruling "appear[ed] to have been arrived at through negotiation and to have depended on employment considerations". It said that if a tax administration had broad discretion to determine the beneficiaries or the conditions under which tax relief was granted on the basis of criteria unrelated to the tax system, such as employment considerations, the exercise of that discretion must be regarded as giving rise to a selective advantage.
"No consistent criteria are applied to determine the allocation of profits to Irish branches of non-resident companies" by the Irish Revenue, the decision said.
"The Commission has no competence, under state aid rules, unilaterally to substitute its own view of the geographic scope and extent of the member state's tax jurisdiction for those of the member state itself," the Irish government said in a statement.
"The purpose of the state aid rules is to tackle state interventions which confer a selective advantage. The state aid rules by their nature cannot remedy mismatches between tax systems on a global level," Ireland said.
Apple issued its own statement in which it said that it has been singled out as a "convenient target".
"Because our products and services are created, designed and engineered in the US, that's where we pay most of our tax... this case has never been about how much tax Apple pays, it's about where that tax is paid," Apple said.
The European Commission does not have direct authority over national direct tax systems. However, under EU rules it is unlawful for any EU country to give financial help to selected companies in a way which would distort fair competition. If a tax ruling contravenes market principles so as to confer a selective advantage, it could be considered to be state aid.
In June 2014 the European Commission announced in-depth investigations into whether tax rulings issued to Apple by Ireland, Starbucks by the Netherlands and Fiat Finance and Trade by Luxembourg amounted to "unjustifiable" state aid. In October 2014 a similar investigation was announced into Amazon in Luxembourg and in December 2015 an investigation was launched into 'double non-taxation' of McDonalds in Luxembourg.
In October 2015 it decided that the rulings provided to Fiat and Starbucks constituted unlawful state aid and that the countries would have to recover €20-to-€30 million from each company to claw back the benefits of the state aid received. The Amazon and McDonald's investigations are continuing.