Microsoft Faces EU Tax Inquiry

Microsoft is among a number of companies involved in a series of tax evasion investigations by the European Union. The software giant joins Amazon, Apple and a number of non-technology companies that are being scrutinized in a variety of EU member states.

The Europe Commission (EC) has queried numerous EU countries, including Belgium, Cyprus, France, Hungary, Ireland, Luxembourg, Malta, The Netherlands, Spain, the UK, about how they tax multinational firms. The goal, of course, is to discover whether any are abusing the complex EU bureaucracy or getting country-specific sweetheart deals to lower their tax footprint.

Luxembourg is being questioned about Microsoft, as well as Amazon.com and non-tech companies such as Fiat and McDonalds.

"We are in constant contact with the European Commission on all these tax issues and Luxembourg is pretty confident in the way it handles its taxation issues and so we're going to monitor the information with the commission and hand over the information that is requested," Luxembourg finance minister Pierre Gramegna said Monday.

The EC confirmed the growing investigation—which started with Apple (in Ireland) and a few other firms years ago—but didn't provide additional details about the companies involved. Earlier reports said that these firms avoided paying billions of dollars of taxes in the EU over several years.

"The commission continues to gather information about certain tax practices in several member states," EC spokesperson Antoine Colombani said. "However we will not make any comment on whether specific companies may or may not be covered by this information-gathering exercise."

A Financial Times report claims the Microsoft investigation involves taxes on intellectual property. Amazon, also being investigated with regards to Luxembourg, has allegedly acquired a suspiciously low tax rate for itself in that country. And given the suddenly widening scope of these investigations, it's likely that other firms—including high-tech giants like Google—will become embroiled in this drama soon as well.