Microsoft's first public Country-by-Country Report reveals significant profit concentration in low-tax jurisdictions. The filing, covering fiscal year 2025, shows Ireland accounted for 38.1% of the company's global pre-tax profits, totaling $47.08 billion. However, Ireland employed just 6,654 people, or 2.92% of Microsoft's total workforce.
The pattern extends to Luxembourg, where Microsoft booked $283 million in profits with only 34 employees. This calculates to approximately $8.3 million in profit per worker, with an effective tax rate of 3.3%.
The disclosure arrives as global tax policy faces major changes. The OECD's Pillar Two framework, establishing a 15% global minimum corporate tax rate, is being adopted worldwide. Luxembourg's 3.3% effective rate on Microsoft's profits falls well below this new threshold.
The report highlights ongoing scrutiny of intellectual property assignment and intercompany pricing practices used by multinational corporations.