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COPENHAGEN (Reuters) - Denmark wants Microsoft to pay $1 billion in back taxes in one of the biggest tax cases in the country's history, local media reported on Monday.

The Danish tax authority is in negotiations with Microsoft over unpaid taxes stemming from the $1.88 billion takeover of Danish software company Navision in 2002, Danish Radio DR said, quoting unnamed sources.

The tax authority claims Microsoft sold the rights to Navision's successful business planning software, now under the name of Dynamics NAV, at below market value to a subsidiary in Ireland, DR said.

As a result the tax authority is claiming 5.8 billion crowns in back taxes and interest from sales of Dynamics NAV, the public service radio broadcaster said.

A Microsoft representative in Denmark declined to comment on the report as did the Danish tax authority.

The Danish government proposed in February to gradually lower the corporate tax rate to 22 percent from 25 percent, while corporate tax in Ireland can be as low as 12.5 percent, depending on the type of business.

A recent U.S. government report said U.S. multinational companies reported 43 percent of their overseas profits in tax havens like Bermuda, Ireland, Luxembourg, the Netherlands and Switzerland in 2008.

(Reporting by Johan Ahlander; Editing by Greg Mahlich)

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