Microsoft might have to pay the state of Denmark more than $1 billion in unpaid taxes, Denmark's national broadcasting agency DR reports.

The debt is related to Microsoft's acquisition of Danish financial software company Navision, which Microsoft bought for $1.3 billion in July 2002. The Redmond giant subsequently sold the rights to Navision's enterprise resource planing and accounting software to its Irish subsidiary. The Danish Treasury alleges that the price of the assets in this second transaction was too low, allowing Microsoft to transfer valuable assets out of high-tax Denmark and avoid paying dues and taxes on the transaction, according to a report.

The Danish Treasury is now going after Microsoft for the value of the taxes (plus interest) that were avoided by the low purchase price paid by the Irish subsidiary. The amount would be 5.8 billion Danish kroner, or $1.01 billion.

Large multinationals in the IT sector, such as Apple, Google and Microsoft, are known for their use of tax havens to minimize their tax fees. Microsoft will probably try to wiggle its way out of this one, but given the enormous amount of money it allegedly owes Denmark, it might be a hard task.

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