Microsoft Corporation (NASDAQ:MSFT) is one U.S.-based company that has developed a strong international presence and has developed its own global economy that guides sales in virtually every country. And with those transactions, there is an expectation that companies will pay their share of taxes. In the case of Microsoft, one of those transactions, which occurred more than 10 years ago, just may come back to bit the company.
Denmark treasury authorities are reportedly chasing Microsoft Corporation (NASDAQ:MSFT) upon a report that Redmond may owe the country $1 billion in taxes stemming from the company’s $1.3 billion purchase of Denmark-based financial tech company Navision back in 2002. The purchase, which was a stock-and-cash deal, resulted in what is now a division called Dynamics NAV (was called Microsoft Business Solutions). Where the possible tax evasion comes from, according to a Danish report, was from a transaction that occurred subsequent to the Navision buy itself, when Microsoft sold part of Navision to its Irieland-based subsidiary – which is reportedly actually run by companies in tax-haven countries like Bermuda – at a price that Danish tax regulators believed was too low. This, according to the Danish officials, allowed Microsoft to work around the notoriously high tax structure in Denmark.
The report goes on to suggest that Microsoft Corporation (NASDAQ:MSFT) has recently begun negotiations with the Danish Treasury officials regarding a settlement that will prevent Redmond from forking over the $1 billion allegedly owed. This tax dispute goes in line with similar issues in other European countries in terms of taxation, in which other U.S.-based companies like Apple Inc. (NASDAQ:AAPL), Facebook Inc. (NASDAQ:FB) and more recently, Google Inc. (NASDAQ:GOOG) are being challenged for their loopholes in EU tas rules – perhaps only because of the EU economy in a shambles and countries needing more tax revenue.
Is there anything to this in regards to Microsoft Corporation (NASDAQ:MSFT)? What do you think about the tax rules? Are these companies exploiting them, and do you think those loopholes should be closed for multinational corporations? Give us your thoughts in the comments section below.
DISCLOSURE: I own no positions in any stock mentioned.
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