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BUSINESS

Tax Agency raises Microsoft Spain’s bill to €30 million

Tech giant slapped with second €18.6m sum after appealing first one at High Court

A Microsoft store in New York.
A Microsoft store in New York. Bloomberg

The Spanish Tax Agency is asking tech giant Microsoft’s local subsidiary for €30 million in owed corporate tax.

Microsoft Ibérica already owed €11.9 million in back taxes since 2011, but on April 8, 2015 authorities added a further €18.6 million to the bill, raising the total to over €30 million, as reflected in the latest company filings at the Business Registry.

Despite a drop in sales, Microsoft Ibérica’s profits grew 19.2% from €8.4 million to €10.02 million

The new sum is the result of an inspection of Microsoft Ibérica’s tax filings for 2007, 2008 and 2009, which established that the company owed €18.6 million. Microsoft has appealed that sum before the Central Economic-Administrative Court.

By then, Microsoft’s Spanish subsidiary already owed €11.9 million in back taxes from the fiscal years 2004 and 2005, according to a 2011 decision by tax inspectors. The company also appealed that sanction before the same court, which rejected the claim. Microsoft then turned to the High Court, which has yet to reach a decision.

Microsoft Ibérica closed the fiscal year ending June 30, 2015 with a 0.7% drop in sales compared with the previous year, for a total of €166.7 million, according to company filings.

But most Spanish sales are really handled by Microsoft Ireland, which has lower corporate tax. Microsoft Ibérica receives a fee for sales support, marketing and other activities.

Despite the drop in sales, Microsoft Ibérica’s profits grew 19.2% from €8.4 million to €10.02 million.

Authorities in Spain, like elsewhere, have been scrutinizing large corporations’ tax avoidance strategies. Besides internet and tech companies, Spanish fashion retailer Zara has also come under fire for such practices.

English version by Susana Urra.

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