Denmark wants Microsoft to pay 5.8 billion Danish crowns (€778 million) in back taxes in relation to the sale of software to an Irish subsidiary, according to Danish media.
The Danish tax authority negotiating with Microsoft over unpaid taxes stemming from the €1.45bn takeover of Danish software company Navision in 2002, Danish Radio DR said, quoting unnamed sources.
The tax authority claims Microsoft sold the rights to Navision's successful business planning software, now under the name of Dynamics NAV, at below market value to a subsidiary in Ireland, DR said.
As a result the tax authority is claiming 5.8 billion crowns in back taxes and interest from sales of Dynamics NAV, the public service radio broadcaster said.
A Microsoft representative in Denmark declined to comment on the report as did the Danish tax authority.
The Danish government proposed in February to gradually lower the corporate tax rate to 22% from 25%, compared to Ireland’s corporation tax rate of 12.5% for certain types of business.
A recent US government report said US multinational companies reported 43% of their overseas profits in low-tax jurisdictions like Bermuda, Ireland, Luxembourg, the Netherlands and Switzerland in 2008.