Microsoft acquired the Danish mid-market business applications vendor Navision in 2002
The Danish tax authority has filed a $1bn tax claim against Microsoft, alleging that the company did not pay full share of corporate taxes in the sale of software firm Navision.
Microsoft acquired the Danish mid-market business applications vendor Navision for about $1.3bn in 2002, and transferred assets of the acquired firm to Ireland to 'avoid Denmark's high corporate taxes'.
Navision was first renamed as Microsoft Business Solutions, but the company is now called, Microsoft Dynamics NAV.
The tax authority claims the software maker divested the valuable assets well below market value, and is looking for compensation apart from 11 years of interest.
The Denamark government is planning to lower the corporate tax rate to 22% from 25%, while corporate tax in Ireland is 12.5%.
Last year, Microsoft was accused of not paying tax on £1.7bn of online sales it generated in the UK.
European Union (EU) regulators are planning to fine Microsoft by the end of this month for the company's failure to provide users with a choice of Internet browsers.