Microsoft may be after-taxed $1 Billion by Denmark

[Curt]

In year 2002 Microsoft purchased the Danish financial management program Navision for approx US $1.6 Billion. Shortly after this, Microsoft Denmark sold Navision to Microsoft Ireland (duty free area) for almost nothing, trying to cheat Denmark of our part of future income. Navision is now known as Dynamics NAV and is still being maintained in Denmark, making Microsoft approx $1.5 Billion per year. But because Microsoft has offices in Bermuda (etcetera) the company still pays almost no tax in Denmark. All this has caused the Danish authorities to accuse Microsoft of tax fraud, demanding another approx $1 Billion in taxes.

[40hz]

I guess Denmark has unique tax laws?

Buying a business and transferring its legal address to some other country purely for tax purposes has been a standard operating procedure used by global corporations (and not just US-based ones) for about the last 40 years.

Be interesting to see how they pursue this case. And under which legal system they'd file it. Jurisdiction and venue is always a tricky thing when dealing with multinationals. I'm guessing about the only thing this will result in is Microsoft pulling Navision development out of Denmark; and (purely for PR purposes) negotiating something (but certainly not $1 billion) with Denmark if they feel it will work to their advantage long-term.

Oh well...I wish Denmark good luck with this one.

[Renegade]

Well, I read this post shortly after you posted it, and have been trying to think of what to remove from what I'd like to say other than everything.

<UBER_TONGUE_IN_CHEEK_SMART_@$$_MODE>

I'm drawing a blank.

Perhaps I could ask a question... What if regular people did the same thing? It is all legal after all, right?

Perhaps we're mistaking "legal" and "ethical" when we approach these topics. My belief is that they are not the same, but then again, I could be mistaken. Perhaps whatever is passed into law is necessarily ethical?

</UBER_TONGUE_IN_CHEEK_SMART_@$$_MODE>

[app103]

Hey, could we do this in the US for companies that offshore their labor to evade federal & state minimum wage laws, unemployment insurance, and Social Security taxes? 

[f0dder]

Did anything happen when we were bitching at Coca Cola and McDonalds because they're doing tax evasion?

I'm going to be surprised if anything much happens. Lots of jobs, etc.

[Tinman57]

  The last time I was in Denmark, back in the mid-80's, the taxes were sky-high, so I can see why MS would try to do this, even though it's unethical even if legal.  The problem Denmark is going to have is going up against a Meg-Corporation that probably has more money than Denmark's gross national product.  Even the U.S. has problems in taking on MS in the U.S. courts.

[f0dder]

The last time I was in Denmark, back in the mid-80's, the taxes were sky-high, so I can see why MS would try to do this, even though it's unethical even if legal.

1) the megacorps do this no matter how low the taxes are - if they could save even a penny by nasty psychopathic behaviour, they'd do it.
2) the taxes are only sky-high if you look at the absolute number without considering the value we get from it. (Or used to get - libertarian scumbags have been doing a good job of undermining various things and stuffing money in their (friends) pockets for a while).

[mahesh2k]

So I can't sell code from one unit of my company in x country to Y country? I thought internal sales are part of the governments policies.

[f0dder]

So I can't sell code from one unit of my company in x country to Y country? I thought internal sales are part of the governments policies.

Microsoft bought Navision for 10.8 billion DKK, then sold it to Microsoft Ireland for a lot less than that - and substantially less than it's worth. That's tax evasion - and it's illegal.

Doesn't stop the psychopathic megacorps from using all sorts of tricks to try and do it, and they often get away with it due to loopholes. Might make it technically legal, but it doesn't make it morally acceptable.

[40hz]

Microsoft bought Navision for 10.8 billion DKK, then sold it to Microsoft Ireland for a lot less than that - and substantially less than it's worth. That's tax evasion - and it's illegal.

It think that would depend on who's tax code you're basing that argument on. Laws vary greatly. There's no universal agreement since each nation so fiercely defends its own sovereignty and niggling 'cultural identity' that any attempt at establishing a uniform set of laws gets torpedoed less than a day after it's proposed.

Doesn't stop the psychopathic megacorps from using all sorts of tricks to try and do it, and they often get away with it due to loopholes. Might make it technically legal, but it doesn't make it morally acceptable.

A large part of the ethical conundrum with this is that taxes are assessed by governments and based on laws written by them. And we all know ethical our governments are. To say nothing of the incredibly moral and ethical ways our tax monies often get used.

[tomos]

Not an area I know anything about, but it seems logical to me that if I sell something in a particular country, that the sale would have to comply with the laws of same country - even if it's been exported. But we dont know why *exactly* (on what grounds) they are claiming the back tax so it's all a bit moot, innit?

Be interesting to see what happens anyway.

[rgdot]

Microsoft bought Navision for 10.8 billion DKK, then sold it to Microsoft Ireland for a lot less than that - and substantially less than it's worth. That's tax evasion - and it's illegal.

It think that would depend on who's tax code you're basing that argument on. Laws vary greatly. There's no universal agreement since each nation so fiercely defends its own sovereignty and niggling 'cultural identity' that any attempt at establishing a uniform set of laws gets torpedoed less than a day after it's proposed.

Doesn't stop the psychopathic megacorps from using all sorts of tricks to try and do it, and they often get away with it due to loopholes. Might make it technically legal, but it doesn't make it morally acceptable.

A large part of the ethical conundrum with this is that taxes are assessed by governments and based on laws written by them. And we all know ethical our governments are. To say nothing of the incredibly moral and ethical ways our tax monies often get used.

So tempted to make this a basement thread  

[f0dder]

It think that would depend on who's tax code you're basing that argument on. Laws vary greatly. There's no universal agreement since each nation so fiercely defends its own sovereignty and niggling 'cultural identity' that any attempt at establishing a uniform set of laws gets torpedoed less than a day after it's proposed.

The Danish government is obviously basing the argument on Danish law, since it was Microsoft Denmark who bought the Danish company Navision :-)

Be interesting to see what happens anyway.

Probably nothing - just like when the biggest tax scandal was McDonalds, or when it was Coca Cola, or when it was Mærsk, or when it was <insert greedy psychopathic megacorp name here>.

The megacorp in question moans and groans and threatens to move abroad, the politicians shit their pants and shut their mouths, and we're back to psychopathic business as usual.

[40hz]

The megacorp in question moans and groans and threatens to move abroad, the politicians shit their pants and shut their mouths, and we're back to psychopathic business as usual.

Bingo!   That's the real problem with unchecked population growth. What to do with all the people above and beyond what's needed for a given society to actually function and thrive.

The answer (so far) has been to create jobs and keep them busy. Otherwise they'll have too much time on their hands. And people with too much time on their hands eventually get bored with their own lives and start trying to run other people's. That is a practice known as "going into politics."

And as far as our existing politicos are concerned, those positions have already been adequately filled. By them...

[attach]

[barney]

Perhaps we're mistaking "legal" and "ethical" when we approach these topics. My belief is that they are not the same, but then again, I could be mistaken. Perhaps whatever is passed into law is necessarily ethical?

Legality and ethics have never shared common ground, to the best of my [history] knowledge.  A number of politicos - and corporations! - have tried to make that association, but ...

[Carol Haynes]

To add to MS woes (or for everyone else a good laugh) http://www.bbc.co.uk/news/technology-21684329