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Category: Digital Economy

Taxation and allocation of income generated from cross-border activities in the digital economy – Google, Apple, Microsoft, Netflix, Ebay, Amazon, Facebook, Alibaba, Baidu, Tencent, Uber, Airbnb, Expedia, PayPal etc.

Facebook in billion dollar dispute with the IRS related to transfers of intangibles to Ireland

In the annual report for 2018 Facebook Inc. has included the following statement on current tax disputes with the IRS. “…The tax laws applicable to our business, including the laws of the United States and other jurisdictions, are subject to interpretation and certain jurisdictions are aggressively interpreting their laws in new ways in an effort to raise additional tax revenue from companies such as Facebook. The taxing authorities of the jurisdictions in which we operate […]

France vs. Apple, Feb. 2019, Settelment on Payment of 571 million Euros in Back Taxes

Apple has agreed to paid an additional 571 million euros to France in a settelment with the tax authorities. According to the French news agency, l’expansion l’Express – “For several months now, secret negotiations on this subject have been taking place between Apple and the French International Audit Department (DVNI). But it is not until the end of December 2018 that a confidential agreement was reached. The subject of the negotiations has been the limited […]

Blizzard Gaming involved in major Tranfer Pricing disputes

US Gaming Giant, Activision Blizzard Inc. – known for games such as World of Warcraft and Diablo – is and has been involved in several major transfer pricing disputes – with the US, French, UK, and Swedish tax authorities. In a 10Q filing with the US Securities and Exchange Commission from November 2018 the following information was provided by the company on pending tax cases. “Activision Blizzard’s 2009 through 2016 tax years remain open to […]

Denmark vs Microsoft Denmark, January 2019, Danish Supreme Court

In this case, the Danish tax authorities were of the opinion that Microsoft Denmark had not been properly remunerated for performing marketing activities due to the fact that OEM sales to Danish customers via MNE OEM’s had not been included in the calculation of local commissions. According to the Market Development Agreement (MDA agreement) concluded between Microsoft Denmark and MIOL with effect from 1 July 2003, Microsoft Denmark received the largest amount of either a […]

Microsoft – Taxes and Transfer Pricing

For many years Microsoft’s tax affairs have been in the spotlight of tax authorities. Why? The setup used by Microsoft involves shifting profits from sales in the US, Europe and Asia to regional operating centers placed in low tax jurisdictions. The following text has been provided by Microsoft in a US filing concerning effective tax and global allocation of income: “Our effective tax rate for the three months ended September 30, 2017 and 2016 was […]

Major US MNE’s in Ireland

Major US MNE’s with regional Headquarters in Ireland for European business activities. The corporation tax rate in Ireland is only 12.5%. However to further sweeten the deal for MNE’s, Ireland has been known to offer special tax deals to MNE’s resulting in much lower effective tax rates. Ireland provides MNEs with both low tax centers for European activities and conduit holding companies serving as hubs for transferring profits and capital to low tax jurisdictions such […]

US SOUTH DAKOTA v. WAYFAIR, INC., June 2018, US Supreme Court, Case No. 17-494

Concerned about the erosion of its sales tax base and corresponding loss of critical funding for state and local services, the South Dakota Legislature in 2016 enacted a law requiring out-of-state sellers to collect and remit sales tax “as if the seller had a physical presence in the State.” The Act covers sellers that, on an annual basis, deliver more than $100,000 of goods or services into the State or engage in 200 or more […]

India vs Mastercard, June 2018, AAR No 1573 of 2014

The issue in this case was whether Mastercard Asien Pasific Ltd has a permanent establishment in India as regards the use of a global network and infrastructure to process card payment transactions for customers in India and as regards other related activities. India’s Authority for Advance Rulings found that that Mastercard’s activities in India created a permanent establishment under several different theories. The AAR also concluded that processing fees paid to Mastercard’s regional headquarters in […]

Tax avoidance in Australia

In May 2018 the final report on corporate tax avoidance in Australia was published by the Australian Senate. The report contains the findings, conclusions and recommendations based on 4 years of hearings and investigations into tax avoidance practices by multinationals in Australia. Share:

Denmark vs Microsoft Denmark, March 2018, Danish National Court, SKM2018.416.ØLR

The Danish Tax Ministry and Microsoft meet in Court in a case where the Danish tax authorities had issued an assessment of DKK 308 million. The Danish tax authorities were of the opinion that Microsoft had not been properly remunerated for performing marketing activities due to the fact that OEM sales to Danish customers via MNE OEM’s had not been included in the calculation of local commissions. In court, Microsoft required a dismissal with reference […]

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