Dr. Evil from Austin Powers would be proud. Officials in Denmark have alleged Redmond to have dodged an enormous amount of taxes, claiming that the software company may have to pay back a total of $1 billion in case local authorities managed to demonstrate the dodge.
According to Danish media, Microsoft used its Irish subsidiary to bypass millions in tax payments after the purchase of Navision from a local entity known as Navision A/S.
Those of you in on all this may know that Navision is the foundation of Microsoft Dynamics NAV, which was previously named Microsoft Business Solution.
Danish publication DR Forsiden claims that soon after the acquisition was completed, the software giant decided to transfer all rights to the Irish division, for the fascinating reason that local taxes there are far lower than may other European countries.
Microsoft, conversely, holds a view that it has done nothing illegal, and has reminded that it supports several nations across the globe this way, while bringing employment to thousands of people.
A company spokesperson said last December:
“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.”
Of course, you may recall that this is not the first time Microsoft has resorted to such legal tricks to skirt taxes — the company uses several offshore offices in Bermuda and British Virgin Islands to save a few million pennies.
And well, let’s just say that Microsoft is not the only company that indulges in practices like these — this legal trick is used by everyone from AOL to Amazon, eBay, even Starbucks that rely on offshore set ups like these to dodge state taxes.