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Something Rotten? Microsoft Gets A Billion-Dollar Danish Tax Bill

Back taxes from a 2002 deal in Denmark may come back to haunt Microsoft.

According to Danish news outlet DR the nation's treasury may be seeking a sum of 5.8 billion kroner—around $1 billion—in taxes that are due from Microsoft's 2002 purchase of local financial software firm Navision.

Microsoft bought the company for about $1.3 billion, then used its assets to create a new division but sold rights to the financial software to its Irish subsidiary. It's this transaction that the Danish authorities are concerned with, because they say it happened at an artificially low price that allowed Danish IP to be removed from the country.

Negotiations with Microsoft are said to be underway. Late last week other news reports indicated that the European Union may be on the point of fining Microsoft over continued antitrust abuses relating to Internet Explorer. So far the EU has levied fines of over $2 billion for anti-competitive practices. In February Microsoft founder Bill Gates called on his old company to innovate more. Not sure this is what he had in mind.

[Image: Flickr user govert1970]

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  • GSkairo

    The case is not about the sale of the Company, bur in renards to the internal Price the Company is Selling the IP to it selv at. The software earns more Them 1.5billion to MS each year, but the transfere Price is not the marked valmue. That is tax evation, link MS face charges of in India and france amongst otter plages.

  • bobafeta66

    Seeking back taxes from 11 years ago...sounds fishy to me...on the part of Denmark. It's one thing to set up legal tax entities; it's another to explicitly cheat the system. Sounds like Denmark's simply mad they ended up on the losing end. Too bad, so sad.