It looks like Microsoft could be hit with a large tax bill if the Danish authorities have anything to do with it, where Denmark officials are considering a tax levy of 5.8 billion kroner, or around $1.01 billion. This is all in relation to Microsoft's acquisition of financial software maker Navavision back in 2002.
Microsoft have reportedly been using Caribbean-based shell companies to operate their acquired company's enterprise planning and account units. This has allowed Microsoft to push profits away from Denmark where tax rates are 25%, compared to the effectively 0% in the Caribbean. Obviously they aren't the first company to do something like this, with most big corporations and companies funnelling cash into places like Bermuda to save on tax.
It's being reported that Microsoft and Danish officials are in talks regarding the bill, which includes back taxes, penalties and fees, too.