The recent headlines from Apple are that you can have taxes or you can have jobs, but you can't have both. What does this have to do with patents? Everything.

Apple followed an approach that many corporations utilize to reduce taxes, where a company's intellectual property is licensed to a subsidiary who then pays for research and development costs, or pays licensing fees, or some other costs. Apple used this approach with its Irish subsidiary. Not only did Apple negotiate low tax rates with Ireland, it then used those low tax rates to effectively pass money back to the US to cover R&D costs, at least according to the EU commission:

Apple Sales International and Apple Operations Europe are two Irish incorporated companies that are fully-owned by the Apple group, ultimately controlled by the US parent, Apple Inc. They hold the rights to use Apple's intellectual property to sell and manufacture Apple products outside North and South America under a so-called 'cost-sharing agreement' with Apple Inc. Under this agreement, Apple Sales International and Apple Operations Europe make yearly payments to Apple in the US to fund research and development efforts conducted on behalf of the Irish companies in the US. These payments amounted to about US$ 2 billion in 2011 and significantly increased in 2014. These expenses, mainly borne by Apple Sales International, contributed to fund more than half of all research efforts by the Apple group in the US to develop its intellectual property worldwide. These expenses are deducted from the profits recorded by Apple Sales International and Apple Operations Europe in Ireland each year, in line with applicable rules.

The use of intellectual property within a corporation, with various ownership and internal licensing structures, has long enabled various tax planning approaches. The EU case will be closely watched not only for its international headlines, but by corporate tax and intellectual property experts.