You want your multinational corporation to be seen as a goodcorporate citizen. But you also feel obliged to your company'sshareholders to keep it from paying a cent more in taxes than it isrequired to.

So, what's the dividing line beyond which responsible taxmanagement turns into poor citizenship? Well, for the moment itappears to be somewhere between this:

Apple set up their sales operations in Europe in such a way thatcustomers were contractually buying products from Apple SalesInternational in Ireland rather than from the shops thatphysically sold the products to customers. In this way Applerecorded all sales, and the profits stemming from these sales,directly in Ireland.

And this:

Under the agreed method, most profits were internally allocatedaway from Ireland to a “head office” within Apple SalesInternational. This “head office” was not based in any countryand did not have any employees or own premises. Its activitiesconsisted solely of occasional board meetings. Only a fraction ofthe profits of Apple Sales International were allocated toits Irish branch and subject to tax in Ireland. Theremaining vast majority of profits were allocated to the “headoffice,” where they remained untaxed.

Those passages are both from the news release issued Tuesday bythe European Commission announcing that it was ordering Apple topay 13 billion euros ($14.5 billion) in back taxes plusinterest.

The decision will surely be fought over for a while yet; U.S.officials have already been complaining that the European Union isunfairly targeting American companies in its tax crackdown. But itseems pretty clear that the devices used by U.S. tech giants toshift their European income not just to low-tax jurisdictions butto nonexistent ones are proving to be a step too far.