Microsoft's European Tax Strategy: Why Ireland Receives Billions While Germany Gets Almost Nothing.

The technology giant Microsoft paid 6.3 billion US dollars in corporate taxes in the European Union last year. This is evident from the first-ever published Public Country-by-Country Report for the fiscal year 2025 (ending June 30), which is available to the German Press Agency (dpa). Notably, Germany receives comparatively little from the approximately 5.53 billion euros.

Although the Federal Republic is one of Microsoft's largest locations in Europe, the tech company paid only income taxes of 174.2 million dollars (153 million euros) here. The lion's share of 5.6 billion dollars benefited the Irish treasury. Dublin is also home to Microsoft's European headquarters.

Globally, the report indicates that the corporate taxes paid by the company during the same period totaled 28.7 billion dollars, placing Microsoft second among the large US tech companies—behind Apple with 29.7 billion dollars. This figure is complemented by other contributions such as payroll, value-added, or property taxes.

With the disclosure of these figures, the tech giant is complying with the new EU transparency regulations. The report details in which countries the company generates revenues, records profits, and how much income tax actually flows to the respective tax authorities.

Microsoft: Ireland as a Hub

Microsoft emphasizes as a guiding principle of its tax structure that contributions are made where employees work, investments are made, and functions, assets, and risks are located. Ireland is the most important operational and financial hub for the company in Europe.

In the fiscal year 2025, the Irish subsidiaries recorded a revenue of 196 billion dollars with 6,654 employees and a pre-tax profit of 47.1 billion dollars. The actual taxes paid during the reporting period (“Income Tax Paid”) amounted to 5.6 billion dollars. Microsoft also cites the reason for the concentration of profits: Central structural features such as the group's internal finance and the holding and management of intellectual property are registered in Ireland.

A Small Slice of the Microsoft Pie for Germany

According to the report, Germany, with 3,471 employees, is one of the largest European locations. The revenue generated here in the last fiscal year was 11.68 billion dollars. However, the pre-tax profit is comparatively low, amounting to a modest 661.2 million dollars on the balance sheet. Consequently, the actual income taxes paid in Germany were only 174.2 million dollars.

Microsoft explains the discrepancy between the billion-dollar revenue and the small profit share with the tasks of the local units: The German companies are reportedly focused almost exclusively on sales, marketing, administrative support, and research and development. The actual, highly profitable software rights, on the other hand, are located in hubs like Ireland.

Special Case: France

In the report for the EU Commission, Microsoft warns against overinterpreting individual figures. The timing of tax calculations and actual payments often differs, and tax refunds can distort the picture. This applies, for example, to the figures from France. With a revenue of 6.67 billion dollars, the table for the year 2025 shows a negative amount of minus 96.4 million dollars for the actual taxes paid. According to company statements, this statistical outlier is due to a one-time refund of taxes overpaid in previous years. In the three preceding years, Microsoft paid a total of 374 million dollars in taxes in France.

Not Just Microsoft: The Bone of Contention Over Taxation of Digital Corporations

In the European Union, there has been a bitter dispute for years over the taxation of US digital corporations, which, according to the European Commission, pay too little in taxes on the European mainland. Because tech giants like Google, Apple, or Microsoft primarily pay taxes where their European headquarters are registered—rather than where they actually generate revenues with millions of users—the EU Commission is pushing for reforms. Brussels is particularly focused on implementing the OECD's global minimum tax and the Digital Markets Act (DMA) to close tax loopholes and ensure taxation at the actual place of value creation.