“Microsoft owes the Danish treasury 5.8 billion kroner, or about $1 billion U.S., in unpaid taxes relating to its purchase of financial software vendor Navision in 2002, says the Denmark treasury.
Most tech companies avoid taxes by leaving foreign income overseas or by routing it through Irish or other low-taxation districts, and that’s happening in this case as well. But this case is not primarily, or at least initially about earnings.
Microsoft bought the company in 2002 for $1.5 billion. So far, all well and good.
The tricky part, according to Denmark, is that Microsoft then transferred its rights in what used to be Navision – the money-making assets — to an Irish subsidiary. And Denmark says that was done at a vastly unfair market value, which is illegal according to taxation rules, says local press agency Nyheder.