Danish tax authority sues Microsoft for DKK 5.8 billion

Denmark’s tax agency Skat has filed a lawsuit against US software giant Microsoft. According to a report published by Copenhagen-based broadcaster DR on Monday 4 March, Microsoft is being pursued over accused wrongdoing when the Seattle-based firm purchased Danish company Navision in 2002.

Skat is reportedly seeking some DKK 5.8 billion (EUR 778 million) in lost revenue and interest. The organisation has accused the Windows-maker of sidestepping taxes by buying Navision with its sister firm Microsoft Denmark and then re-selling it to its US counterpart for billions below market value.

Officials from the authority claim that the process was done in order to avoid required ‘transfer-pricing’ rates as outlined in Danish tax law. The regulation requires that major transactions are done at market value prices when the deal is taking place between two sister companies.

Supply chain management firm Navision has since been renamed Dynamics NA and now produces annual revenues totalling to more than DKK 10 billion for its American parent firm, according to the DR report.