Rolling Stones - Bibliography
- Author Aswini Anburajan
- Publication: 20007.02.14 ABC News (original link) (archived at How Bono and the Stones avoid paying their taxes)
Where the stars hide their money
Come visit your money, stay for the Heineken Tour — the Netherlands is the latest tax shelter hot spot
Feb. 14, 2007 - U2, the Rolling Stones, movie stars, sports figures and a host of corporations have turned to an unlikely accountant, the Netherlands, to help them avoid paying taxes on multimillion dollar profits in their home countries.
Bands like the Rolling Stones and U2 were publicly outed last summer for using tax shelters in the Netherlands to protect the millions they earn on royalties from getting taxed in their respective home countries.
They are part of a growing number of celebrities who’ve turned to the low-tax, politically stable Netherlands to protect royalties they earn legally from licensing intellectual property — from J.Lo’s derriere to U2’s hit song "One."
And the Dutch have beckoned by overhauling their tax structure this past year to make it easier and more lucrative for individuals and corporations to set up shell companies that allow income from royalties, interest and dividends to flow in and out of the country tax-free.
"What a group like U2 or the Rolling Stones has done is create a holding company that owns the rights to their songs and their name," Richard LeVine, an international tax expert who counsels corporate and individual clients on asset protection for the Connecticut-based Withers, Bergman LLP, tells ABC News.
"So every time their song is played on the radio, or they sell an album, royalties are paid to their Dutch company, which allows them to collect millions of dollars in royalties tax-free and lowers the profits they’re paying taxes on in their home countries," LeVine says.
Mailbox companies, or corporate shells, allow companies to channel royalties, dividends and interest payments through the Netherlands. More than 20,000 exist right now, according to a report by the Netherlands-based SOMO, the Center for Research on Multinationals.
The Dutch Federal Bank estimates that in 2002, 3.6 billion euros flowed through such companies.
The Rolling Stones has taken advantage of the Netherlands tax structures for the past 20 years, with the help of Dutch accountant Johannes Favie, who runs Promogroup, a financial consulting firm. Promogroup has helped the Rolling Stones pay just over $7 million in taxes on earnings of $450 million over the past two decades. In 2005, the rockers paid a tax rate of 1.6 percent on earnings of $172 million…
U2’s move came on the heels of a change in Irish tax law, which originated as a way to help struggling artists by not taxing their royalties. It also allowed world-famous Irish artists like Van Morrison, U2, the Cranberries and Sinead O’Connor to earn millions in untaxed royalties…
With the help of the Promogroup, the band created U2 Ltd., which now holds the rights to its song catalogue. U2 Ltd.’s earning are not known. However, the band is said to be worth around $900 million, according to the annual "Rich List" published by London’s Sunday Times…
U2 earned $389 million on its last world tour, according to Billboard Magazine, making it the second-most lucrative tour of all time. The band members were beat out by the Rolling Stones, who earned a hefty $425 million by the end of 2006 for its most recent tour…
A spokeswoman for U2 also said that the band would not comment. However, U2’s lead guitarist, David Evans reportedly told a Dublin radio station in October, "Of course we’re trying to be tax efficient. Who doesn’t want to be tax efficient?" …