MARGRETHE VESTAGER, the European Union’s competition commissioner, likes to knit elephants in her spare time, because, she once said, “they bear no grudge, but they remember well”. It is hard to imagine executives at one of the big beasts of the tech world forgetting August 30th 2016 in a hurry: that is when Ms Vestager (pictured) ordered the Irish government to recover up to €13 billion ($14.5 billion), plus interest, in unpaid taxes from Apple. The decision was expected, but the number was higher than experts had predicted.

The ruling is the most important—and controversial—moment so far in the war on corporate tax avoidance. Tax-justice campaigners hooted with delight. Apple was livid, and vowed to appeal. The Irish government may follow; its finance minister, Michael Noonan, would rather “defend the integrity of our tax system”, as he put it, than accept a windfall that would exceed Ireland’s annual health budget. Politicians in America, Apple’s home market, denounced the move as a “tax grab”.

The commission concluded that Irish rulings in 1991 and 2007 artificially lowered the tax Apple was due to pay, and...Continue reading