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Microsoft may owe Denmark $1B in back taxes, report says

Danish authorities want Microsoft to do some explaining about the Navision acquisition it made in 2002 and how that business was then accounted for.


Microsoft may be in a bit of tax trouble in Denmark over an acquisition it made more than a decade ago.

Denmark-based news outlet DR is reporting today that officials in that country are investigating whether Microsoft used certain techniques to save itself billions in taxes. According to the report, after Microsoft acquired financial software company Navision in 2002 for $1.3 billion, it sold off its enterprise resource planning and accounting divisions to an Ireland-based Microsoft subsidiary. That subsidiary is apparently owned by other Microsoft companies in Caribbean tax havens, effectively allowing it to shift Navavision's profits overseas and away from Denmark's higher rates.

Major technology companies, including Apple and Google, have for years used fancy techniques to escape major tax bills. In many cases, they use subsidiaries in Ireland to do so, much to the chagrin of governments elsewhere around the world that want to collect their lost tax revenue.

The Danish Treasury has reportedly been investigating Microsoft's handling of Navision and is ready to levy a bill of 5.8 billion kroner (over $1 billion) on the software giant. The levy includes both taxes and fines that the Treasury Department says, it's owed.

Navision has been on a bit of an odyssey since it was acquired by Microsoft. The company was first renamed Microsoft Business Solutions, but is now known as Microsoft Dynamics NAV. The division still provides business services for financial management, sales and marketing, and other functions.

CNET has contacted Navision for comment on the DR report. We will update this story when we have more information.

(Via The Next Web)

Correction 8:42 a.m. PT: This story originally misspelled the name of the company Microsoft bought in 2002. The company name is correctly spelled Navision.