Did Microsoft Shift Its Profits to Low-Tax Countries? (nytimes.com)
(Sunday July 05, 2026 @05:55PM (EditorDavid)
from the representation-without-taxation dept.)
Microsoft is apparently shifting its profits to countries with low taxes — and out of countries where they have many more employees and significant sales. Back in 2005 Former Microsoft CEO Steve Ballmer even [1]said that a low corporate tax rate "is part of the overall advantage of doing business in Ireland," remembers long-time Slashdot reader [2]theodp . (Ballmer added "It would be disingenuous to say otherwise.")
But in 2026 the EU now requires a country-by-country compliance report, and the New York Times notes that Microsoft "was most likely [3]the first major U.S. technology company to make a so-called country by country report of its finances to comply..."
> Like other big companies, Microsoft uses transactions between subsidiaries to shift profits around to reduce its tax bill. The report revealed a consistent pattern: high returns in low-tax jurisdictions and slim margins in higher-tax ones. The report showed the sometimes absurd results. Microsoft said it had generated almost 40 percent of its pretax income in tax-friendly Ireland, where it employed about 3 percent of its global work force. In higher-tax Germany, the largest economy in Europe, Microsoft earned barely half of 1 percent of its global profits, it said.
>
> Excluding Ireland, the company said, it generated less than 2 percent of its worldwide pretax earnings in Europe... [In Luxembourg Microsoft said it had $283 million in pretax income with only 34 employees.]
>
> [America's] Internal Revenue Service is challenging profit-shifting transactions used by Microsoft, and is seeking back taxes of [4]nearly $29 billion 4. The company has said it disagrees with the I.R.S. and said in a securities filing that it "will vigorously contest" the proposed tax bills.
This week a Microsoft blog post offered their own " [5]context ," arguing that tax is "one important measure of contribution, but it is not the only one.
"Our investments, partnerships, infrastructure, and long-term presence in countries around the world also reflect a commitment to helping strengthen the economies and communities where we operate, today and for the future."
[1] https://www.siliconrepublic.com/business/ireland-still-integral-to-microsoft-says-ballmer
[2] https://www.slashdot.org/~theodp
[3] https://www.nytimes.com/2026/07/03/technology/microsoft-europe-disclosure-tax-havens.html?unlocked_article_code=1.vFA.AZUY.Qj8Au9rWTOvu&smid=url-share
[4] https://www.sec.gov/Archives/edgar/data/789019/000119312526191507/msft-20260331.htm
[5] https://blogs.microsoft.com/on-the-issues/2026/06/30/context-on-our-country-by-country-tax-footprint/
But in 2026 the EU now requires a country-by-country compliance report, and the New York Times notes that Microsoft "was most likely [3]the first major U.S. technology company to make a so-called country by country report of its finances to comply..."
> Like other big companies, Microsoft uses transactions between subsidiaries to shift profits around to reduce its tax bill. The report revealed a consistent pattern: high returns in low-tax jurisdictions and slim margins in higher-tax ones. The report showed the sometimes absurd results. Microsoft said it had generated almost 40 percent of its pretax income in tax-friendly Ireland, where it employed about 3 percent of its global work force. In higher-tax Germany, the largest economy in Europe, Microsoft earned barely half of 1 percent of its global profits, it said.
>
> Excluding Ireland, the company said, it generated less than 2 percent of its worldwide pretax earnings in Europe... [In Luxembourg Microsoft said it had $283 million in pretax income with only 34 employees.]
>
> [America's] Internal Revenue Service is challenging profit-shifting transactions used by Microsoft, and is seeking back taxes of [4]nearly $29 billion 4. The company has said it disagrees with the I.R.S. and said in a securities filing that it "will vigorously contest" the proposed tax bills.
This week a Microsoft blog post offered their own " [5]context ," arguing that tax is "one important measure of contribution, but it is not the only one.
"Our investments, partnerships, infrastructure, and long-term presence in countries around the world also reflect a commitment to helping strengthen the economies and communities where we operate, today and for the future."
[1] https://www.siliconrepublic.com/business/ireland-still-integral-to-microsoft-says-ballmer
[2] https://www.slashdot.org/~theodp
[3] https://www.nytimes.com/2026/07/03/technology/microsoft-europe-disclosure-tax-havens.html?unlocked_article_code=1.vFA.AZUY.Qj8Au9rWTOvu&smid=url-share
[4] https://www.sec.gov/Archives/edgar/data/789019/000119312526191507/msft-20260331.htm
[5] https://blogs.microsoft.com/on-the-issues/2026/06/30/context-on-our-country-by-country-tax-footprint/