Microsoft NZ ownership transferred from US to Luxembourg
Microsoft denies a transfer of ownership of its New Zealand business from the United States to Luxembourg is related to the tiny European state’s favourable tax policies.
Luxembourg, which has a population of less than 600,000, has been accused of facilitating large-scale tax avoidance by multinationals.
Microsoft New Zealand was owned by Microsoft Corp in Redmond until just before Christmas, when its shareholding was transferred to Microsoft Luxembourg International Mobile, Companies Office records have revealed.
Five days before the transfer, Britain’s Guardian newspaper reported that Microsoft subsidiary Skype had been using two Luxembourg companies and an Irish subsidiary to “circulate royalties and profits” in a manner that had allowed its Luxembourg-based entity to pay no corporation tax for five years.
Details of the tax arrangement were among hundreds of deals involving Luxembourg that were exposed in secret documents obtained by the International Consortium of Investigative Journalists.
Microsoft responded to those claims by saying it followed the law in all the countries in which it operated.
Microsoft New Zealand spokesman Brendan Boughen said the feedback he had received from the subsidiary’s tax team, through its legal counsel, was that the transfer of ownership of Microsoft New Zealand to its business in Luxembourg was “entirely unrelated to tax issues but was part of an internal restructuring of Microsoft’s marketing subsidiaries”.
The European Commission ruled this month that the tax treatment offered by Luxembourg to US technology giant Amazon was illegal and had allowed Amazon to operate almost tax-free in Europe.
Luxembourg was the accounting home for about of a fifth of Amazon’s US$74.6 billion annual revenues in 2013, Reuters reported.
Organisation for Economic Co-operation and Development tax director Pascal Saint-Amans, who is leading an unprecedented multilateral drive to close down multinational tax rorts, told Stuff in October that Luxembourg was coming under “enormous pressure” to end some of its practices.
Microsoft’s shares slumped almost 10 per cent overnight amid concerns over soft sales of its core Windows and Office products to business customers.
Its New Zealand subsidiary last reported a profit of $8.1 million on revenue of $78m in the year to June 2013, paying $3.9m in tax and a $7.3m dividend to its US parent.
