Feeds

Report: Danish government hits Microsoft with $1bn tax bill

In the old days they would have come with a longboat

Boost IT visibility and business value

The Danish government is reportedly chasing down Microsoft for nearly a billion dollars in missing tax revenue, stemming from its purchase of Viking accountancy software firm Navision.

According to local media outlet DK, the Danish authorities have begun what could be the largest tax case in the country's history, involving Microsoft's actions after it bought the accountancy software firm Navision for $1.3bn in 2002 and converted it into Microsoft Business Solutions.

The deal was opposed by accountancy software firm Sage as likely to be harmful for competition, but it was approved nontheless. According to sources in the Danish tax ministry, Microsoft then started work on finding ways around Denmark's notoriously high taxes.

According to the report, Microsoft sold the rights to Navison's code to its Irish subsidiary, which in turn is owned by Redmond offshoots in the Virgin Islands and Bermuda. This allowed Redmond to redirect revenues back into its corporate coffers, diverting nearly $11bn in local revenues out of the country and paying a pittance to the Danish authorities.

All this is technically legal, provided it's done right. But the tax authorities have been investigating, and a source told DK that the government thinks it can prove Microsoft sold the rights to its Irish branch at significantly below market value. It has hit Redmond with a tax bill of 5.6bn Danish kroner ($0.98bn), representing lost taxes and interest.

The case certainly has the potential to be massive. Steve Ballmer reported in 2004 that Danes bought more Microsoft business software per capita than anyone in the world. A year later, Redmond was forced to deny reports that it was threatening to pull jobs out of Denmark over the former Vikings' opposition to the European directive on Computer Implemented Inventions (CII).

Microsoft has not made any official comment thus far, and the Danish authorities are unlikely to make any statements until they've brought home the bacon. But people familiar with the matter said that at the time, Microsoft hired a third-party company to assess a fair price for the technology. For its part, Microsoft disputes the timeline of the report and said the Irish subsidiary wasn't involved.

When it comes to clawing money from foreign companies, the Danes have something of a history. In the ninth century the Danish king Cnut conquered much of England, taking vast amounts of tribute (or Danegeld) from the hapless Britons.

The Danes have calmed down a lot since then, but the Seattle coast guard might want to be on the lookout for the odd longboat floating offshore. ®

Maximizing your infrastructure through virtualization

More from The Register

next story
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.