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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.

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

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]