Tax Cases to Watch in 2024: Microsoft, Freshfields Partner, Apple, and SKAT

As the tax landscape evolves, 2024 is poised to be a year filled with significant developments in tax disputes. From multinational corporations to high-profile legal battles, here are four cases that are set to capture attention throughout the year.

Microsoft's Ongoing Battle with the IRS: Microsoft finds itself entangled in a prolonged dispute with the US Internal Revenue Service (IRS), primarily centered around transfer pricing. The IRS claims that Microsoft owes $28.9 billion in back taxes for the period between 2004 and 2013, plus penalties and interest. Despite this assertion, Microsoft has expressed disagreement, emphasizing that the proposed adjustments do not represent a final determination. The company intends to appeal through the IRS Appeals process, a division dedicated to resolving tax disputes. However, Microsoft anticipates this process to take several years, making it a case to closely monitor not just in 2024 but in the years to come.

Ex-Freshfields Partner's Fraud Case: The trial of Ulf Johannemann, former global head of tax at Freshfields Bruckhaus Deringer, is making waves in 2024. Johannemann is facing charges related to his involvement in Maple Bank's share-swapping deals that misled German tax authorities into refunding over €388 million ($424 million) in dividend taxes. In a surprising turn of events, Johannemann admitted in court to "glossing over" advice that was later used for illegal purposes. Despite Freshfields avoiding direct prosecution due to a 2021 deal, Johannemann could face a multiyear jail term if found guilty, making this a case to closely follow.

Apple's Ongoing Battle with the European Commission: The longstanding dispute between Apple and the European Commission regarding alleged unfair tax advantages continues into 2024. The European Commission had claimed that Apple gained an unfair tax advantage through transfer pricing deals with Ireland, ordering the Irish government to collect €14.3 billion in back taxes. In 2020, the EU's General Court ruled in favor of Apple, stating Brussels failed to show the tech company received an economic tax advantage. However, a significant development occurred in November 2023 when the Court of Justice of the EU (CJEU) advocate general recommended a reassessment, adding further complexity to the case. A final CJEU ruling, possibly in 2024, will be awaited with interest.

SKAT Tax Fraud Trial: The Danish tax authority, Skatteforvaltningen (SKAT), is gearing up for a Commercial Court trial in April 2024, following a legal victory at the UK Supreme Court. The case involves allegations of a £1.44 billion ($1.82 billion) tax fraud, with SKAT targeting British hedge fund trader Sanjay Shah and related companies. SKAT contends that the appellants submitted fraudulent tax refund applications, claiming refunds for dividends from Danish companies they did not own shares in. Shah, separately facing criminal charges in Denmark, was extradited from Dubai in 2022. The trial is anticipated to shed light on the alleged tax fraud scheme.

As these cases unfold, they offer insights into the evolving dynamics of tax disputes, impacting multinational corporations, legal practices, and regulatory frameworks. Stay tuned for updates on these key cases throughout 2024.

By fLEXI tEAM