Microsoft just showed the world exactly where its money goes. And surprise: a whole lot of it ends up in Ireland.

The company released its first-ever public Country-by-Country Report on June 30, covering fiscal year 2025. The filing, mandated by EU Directive 2021/2101, reveals that Ireland accounted for 38.1% of Microsoft’s global pre-tax profits, a cool $47.08 billion, while employing just 6,654 people, or 2.92% of the company’s total workforce.

The numbers tell a familiar story

Luxembourg offers an even more extreme example. Microsoft booked $283 million in profits there with a workforce of just 34 employees. That works out to roughly $8.3 million in profit per employee, with an effective tax rate of 3.3%.

For context, Microsoft says it paid $6.3 billion in income taxes across the EU during FY2025. The company also noted a one-time tax refund from France covering the prior three years, totaling $374 million.

Why crypto should be paying attention

The same instinct driving Country-by-Country Reporting requirements, the idea that profits shouldn’t magically appear in jurisdictions where a company has 34 employees, is the same instinct behind DAC8, the EU’s crypto tax reporting directive. DAC8 requires crypto asset service providers to report user transaction data to tax authorities, with implementation expected in the coming years.

The OECD’s Crypto-Asset Reporting Framework, known as CARF, creates a global standard for the automatic exchange of tax information on crypto transactions. Countries adopting CARF will essentially do for crypto what CbCR does for multinationals: force transparency on where money flows and where it gets taxed.

The profit-shifting playbook under pressure

Microsoft’s disclosure arrives at an inflection point for global tax policy. The OECD’s Pillar Two framework, which establishes a 15% global minimum corporate tax rate, is already being adopted across multiple jurisdictions. Luxembourg’s 3.3% effective rate on Microsoft’s profits sits well below that threshold.

The company itself has tried to frame the disclosure as evidence of responsible corporate citizenship, pointing to its $6.3 billion EU tax bill. But the concentration of profits in low-tax jurisdictions, particularly when employee headcount in those countries is minimal, tells a story about intellectual property assignment and intercompany pricing that regulators have been scrutinizing for years.