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Microsoft’s EU filing puts almost 40% of profit in tax-friendly Ireland

Microsoft’s new EU country-by-country tax filing shows it declared nearly 40% of its global pre-tax profit in Ireland—despite employing only a small fraction of its workforce there—highlighting how tech firms can shift profits to lower-tax jurisdictions.

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John Lewis

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Microsoft’s EU filing puts almost 40% of profit in tax-friendly Ireland

Microsoft has published an EU-mandated country-by-country compliance report under new transparency rules. The filing shows a sharp mismatch between where the company books income and where it has employees, with most of its European profits attributed to Ireland.

In the fiscal year ended June 30, 2025, Microsoft reported about $196 billion in revenue and $47.1 billion in pre-tax profits in Ireland—around 38% of its global pre-tax profits. That occurred while Ireland accounted for only about 3% of Microsoft’s worldwide full-time employees. The report also indicated that Microsoft paid a comparatively small share of its overall taxes in Ireland, drawing renewed scrutiny over profit-shifting practices.

The disclosure also shows that Microsoft recorded very small profit shares in higher-tax markets. The company’s Germany figures, for example, came in at less than 1% of global pre-tax profits, while its profit margins in major markets such as France and Italy were comparatively modest.

Industry critics argue that the pattern suggests multinational companies can allocate profits to low-tax jurisdictions without making a corresponding shift in real economic activity. Microsoft said it follows the tax laws in each country and pointed out it also pays other taxes (such as payroll, VAT, and property taxes) beyond corporate income tax.

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