Microsoft's Ireland hub generates over $7 million in pretax profit per employee, 13 times the company's worldwide average, according to new required disclosures that show the company concentrating earnings in the low-tax jurisdiction.
Microsoft's disclosures are among the first revelations in a coming wave of information that multinational companies now must make publicly available, giving investors and the public their most granular view into the tax life of such firms. Under new European Union rules, large companies have to submit public reports showing revenues, pretax profits and tax payments for many jurisdictions.
Microsoft recorded 38.1% of its pretax profit in Ireland in the year that ended June 30, 2025, and it paid Ireland $5.6 billion in cash taxes, or 19.5% of its global total.
Investors haven't previously seen such country-by-country breakdowns, which go far beyond what is required by U.S. securities rules.
"These are glimpses," said Zorka Milin, policy director of the FACT Coalition, which advocates for corporate tax transparency. "We can begin to raise questions."
Unlike some tech companies that kept intellectual property in the U.S. or repatriated it after tax-law changes, Microsoft has continued using Ireland as the center of its foreign operations. The country offers access to the EU market, native English speakers and an educated workforce. It has also historically attracted foreign companies with low tax rates and other incentives.
Microsoft employed 6,654 people in Ireland and reported $47 billion in pretax profits there, according to the new disclosure. In Germany, by contrast, it had 3,471 employees and recorded $661 million in pretax profits. A company official said pretax profit isn't necessarily a useful measure and urged caution in interpreting the disclosures.
Microsoft, which reported an 18% global effective tax rate for the year in question in its U.S. annual report, said it complies with tax laws. It has previously disclosed that its use of an Ireland hub helped lower the tax rate below the U.S.'s 21% statutory rate.
"We know there are strong views about whether companies are paying enough, and we believe providing this context leads to a more informed conversation," Jeff Bullwinkel, a company vice president and deputy general counsel, said in a blog post Tuesday. "Microsoft is committed to a tax structure that reflects where our people work, where we invest, and where functions, assets, and risks occur."
Microsoft, along with companies such as food-service giant Sysco and Procter & Gamble, are in this early batch of disclosures because they have fiscal years ending in late June. P&G's report showed more than $100 million in profits but no taxes in Luxembourg; in a footnote, the company said it offset profits there with prior-year losses and that its Luxembourg operations have ceased.
The EU doesn't require companies to detail their U.S. operations and taxes, and that means the disclosures don't provide much about companies such as Sysco that are largely domestic. A Sysco report in Europe provides details about 14 jurisdictions -- including Luxembourg, Ireland and Panama -- but in aggregate they account for less than 5% of the company's global pretax profit or taxes paid.
Other companies will report the country-by-country information in the EU over the next year.
Australia imposed a similar requirement, and those disclosures will become public later this year. That follows a different set of new disclosures required by the Financial Accounting Standards Board, which oversees U.S. generally accepted accounting principles. The FASB changes added detail to U.S. securities filings, showing where companies paid cash taxes and how operations in key countries affect the effective tax rate.
Companies warn that the EU disclosures risk double-counting some revenue and that other amounts could be difficult for investors and the public to understand. Acquisitions, restructurings and resolutions of multiyear tax audits can cause anomalies.
"It creates the opportunity for somebody to draw an inappropriate conclusion," Michael Lebovitz, senior vice president for international tax policy at the U.S. Council for International Business, said during a recent panel discussion.
In Microsoft's case, the EU report shows $522 billion in global revenue, compared with $282 billion in its annual report. That is because of how some internal payments can get counted in the EU system. For example, when Microsoft sells software in Latvia, that gets recorded as revenue in Latvia. But if the Latvian subsidiary makes a payment to the Irish subsidiary, that also gets counted as revenue in Ireland.
Companies have criticized the new required European disclosures as unhelpful to tax administrators, who already have been receiving the same information confidentially as a risk-assessment tool.
Milin said corporate concerns are misplaced.
"There is public interest in this information so there's definitely huge value in that," Milin said. "Companies are always free to provide their own context and their own narrative. Unfortunately very few of them do."
Write to Richard Rubin at richard.rubin@wsj.com and Theo Francis at theo.francis@wsj.com
(END) Dow Jones Newswires
June 30, 2026 10:08 ET (14:08 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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