The company may have to pay the state up to $1 billion (€769 million)
Redmond-based technology giant Microsoft is once again accused of avoiding millions of dollars in taxes, this time in Denmark.According to Danish media, Microsoft used its Irish subsidiary to skip millions in taxes after the company purchased Navision from a local firm called Navision A/S.
In case this doesn’t ring any bell to you, Navision serves as the foundation of Microsoft Dynamics NAV, previously named Microsoft Business Solution.
Soon after the acquisition was completed, Microsoft decided to transfer all rights to the Irish division, especially because local taxes are by far lower than in many other European countries.
In addition to this, Microsoft is also accused of deliberately reducing the overall value of Navision in an attempt to pay lower taxes to the Danish authorities.
Danish publication DR Forsiden claims that Microsoft may have to pay back a total of $1 billion (€769 million) in case local officials manage to demonstrate that the company has indeed dodged taxes through its Irish subsidiary.
This isn’t the first time when the software giant is accused of using “legal” tricks to skirt state taxes, as the company uses several offshores in Bermuda and the British Virgin Islands to save millions of dollars in cash.
Microsoft, on the other hand, says that it does absolutely nothing illegal and reminds everyone that the company actually supports several nations across the globe by employing thousands of people.
“Microsoft pays all due taxes, as required by law, worldwide. Microsoft subsidiaries are fully subject to tax in the jurisdictions in which we operate. We are regularly audited by major tax jurisdictions, which ensure the company is complying with all rules and regulations,” a company spokesperson said in December.
In case you’re wondering, Microsoft isn’t the only company that’s using this legal trick, as Starbucks, AOL, eBay and Amazon rely on several offshores to dodge state taxes.