Microsoft EU report shows profits routed to Ireland and Luxembourg
Microsoft's latest EU compliance report shows the company is channeling big profits through countries with low taxes.
For the year ending June 2025, almost 40% of Microsoft's pretax income came from Ireland, where about 3% of its staff work and taxes are just over 14%.
In Luxembourg, it reported a whopping 142% profit margin, paid only 3% in taxes, and employed just 34 people.
Microsoft fights $29 billion IRS claim
Meanwhile, Microsoft claimed single-digit profit margins, sometimes barely 5% in high-tax countries like Germany, France, and Italy. This has sparked questions about its tax practices.
The company is also fighting a $29 billion claim from the IRS over shifting profits around.
Despite global efforts to crack down on corporate tax avoidance, including new EU rules for transparency, US corporations still managed to dodge $40 billion in taxes last year thanks to loopholes in international agreements.