Pabst, I found this at The NY times.
The Netherlands, the New Tax Shelter Hot Spot
Amsterdam
LAST spring, Keith Richards, the craggy-faced and hard-partying lead guitarist for the Rolling Stones, fell from a tree at a beach resort in Fiji, slamming his head against the trunk on his way down. Mr. Richards was flown to New Zealand, where a surgeon provided emergency care to treat swelling in his brain. While the accident forced the Rolling Stones to cancel part of their summer tour, Mr. Richards, 62, handily survived his plunge.
âItâs not the first brush with death Iâve had,â Mr. Richards later told Rolling Stone magazine. âI guess what I learned is, donât sit in trees anymore.â
What two of the other three Rolling Stones apparently learned, including Mick Jagger and Charlie Watts, was that Mr. Richardsâs near-death experience meant that it was time to think about their heirs. For that, the aging rockers turned to a reclusive Dutch accountant, Johannes Favie, whose company, Promogroup, has helped them minimize their tax bills for more than 30 years. (The fourth Rolling Stone, Ron Wood, handles his finances apart from Promogroup.)
And so, last August, according to details disclosed in documents maintained by the Handelsregister, the trade registry of the Netherlands, Promogroup helped the three performers set up a pair of private Dutch foundations that will allow them to transfer assets tax-free to heirs when they die. Other Dutch shelters that Promogroup has arranged for the three have already paid off handsomely; over the last 20 years, according to Dutch documents, the three musicians have paid just $7.2 million in taxes on earnings of $450 million that they have channeled through Amsterdam â a tax rate of about 1.5 percent, well below the British rate of 40 percent.
The Rolling Stones are not the only celebrities sheltering income in the land of tulips, windmills and Rembrandt. The rock powerhouse U2 has transferred lucrative assets to Amsterdam, as have other pop singers and well-known athletes, all of whom have used or continue to take advantage of the Netherlandsâ tax shelters, according to a Dutch tax lawyer who requested anonymity because of client confidentiality agreements.
Entertainment companies and others that benefit handsomely from the Dutch shelters include EMI, the giant record label, and CKX Inc., the entertainment company that owns stakes in âAmerican Idol,â the Elvis Presley estate and the soccer pin-up idol David Beckham.
When it comes to attracting celebrity wealth seeking shelter from taxes, the Cayman Islands and other classic Caribbean tax havens are receding in favor like so many waves on the beach, according to tax experts here and overseas. While old-school, offshore tax havens â the warm ones with tropical fish, off-the-shelf holding companies sporting post-office-box addresses, and scant regulation or transparency â still attract money, they are largely patronized, tax lawyers and entertainment bankers say, by hedge funds and private equity firms looking to protect lush trading profits from taxes.
But for earnings derived from intellectual property such as royalties, the Netherlands has become a tax shelter of choice. With celebrities lending their names and images to clothing lines, licensing their hit songs to corporate sponsors, seeking roles in Hollywood and engaging in other ventures that generate significant taxable income, the Dutch system, which does not tax royalties, offers a nifty shelter.
As they flock to Amsterdam, celebrities are taking a leaf out of the playbook of major corporations that also use Dutch tax shelters to help reduce or eliminate the royalty taxes on patents, another form of intellectual property.
âThe Caribbeans are thinking about trading profits, not royalties, so the smaller European countries like Holland have had to be creative, tax-wise,â said David Pullman, an investment banker in New York who caters to entertainers and athletes. âThey are going for the high-end stuff and donât want to be seen as shady like some Caribbean haven.â
OFTEN mentioned as a candidate to receive the Nobel Peace Prize, or, perhaps less seriously, to run the World Bank, U2âs 46-year-old lead singer, Bono, has toured Africa with senior American officials to campaign against AIDS, and hobnobbed with financiers and policymakers while speaking out on global poverty issues at the World Economic Forum in Davos, Switzerland. He even mugged for the cameras in 2000 with Pope John Paul II, who tried on his sunglasses.
U2âs riches are equally well-traveled and, like the Rolling Stones, the band has become sophisticated about finding overseas shelters for its money. When Ireland announced last spring that it would sharply curtail a lucrative tax break for musicians, painters, writers and sculptors, the shift posed a financial threat to U2, which has made the Emerald Isle its financial power base for nearly three decades. The Dublin-born-and-bred rockers built their fortune on hit songs and, in part, on Irish laws that forgive taxes due on royalties.
As of last year, U2 had amassed a net worth of 629 million euros â around $908 million â according to the annual âRich Listâ of top earners in The Sunday Times of Britain. Royalties are the income that artists and athletes earn from recordings, performances, trademarks, brands, patents, copyrights, film rights, product endorsements, videos, films and the ever-extending commercialization of those assets â in short, the major portion of an artistâs or an athleteâs income..
Last June, with the Irish tax break about to shrink, U2 heeded the advice of its longtime business manager, Paul McGuinness, and moved its most lucrative asset â a song-publishing catalog with hits like âWhere the Streets Have No Nameâ and âItâs A Beautiful Dayâ â from Mr. McGuinnessâs firm, located near the Liffey River in Dublin, to Promogroup, which operates beside the elegant Herengracht canal in the heart of elegant, old Amsterdam.
But critics say that U2âs tax move to Holland is threatening to tarnish the halo surrounding the well-regarded, affable and articulate Bono, by lending him a whiff of hypocrisy. After all, unlike Bono, Mr. Jagger is not out campaigning against third-world debt, or writing a foreword for âThe End of Poverty,â the most recent book by the prominent economist Jeffrey D. Sachs..
Bono is a worldwide advocate for greater aid to the developing world, and I applaud him for that,â said Joan Burton, the spokesperson for the Irish Labor Partyâs finance unit and a former cabinet minister, in a telephone interview. âBut obviously the money for that comes from taxation, so itâs very difficult to ask other people to pay tax to contribute to something very worthwhile while at the same time not paying taxes in a very modest environment.
Jeff Swystun, a global director at Interbrand, a brand consulting firm based in New York, said that âthe Stones will always be credible because of a very simple proposition: we want to have a great party.â But U2, he said, âalmost project themselves as a nonprofit, so the tax move doesnât really fit with the brand values that theyâre trying to communicate..â
The Netherlands, the New Tax Shelter Hot Spot
Amsterdam
LAST spring, Keith Richards, the craggy-faced and hard-partying lead guitarist for the Rolling Stones, fell from a tree at a beach resort in Fiji, slamming his head against the trunk on his way down. Mr. Richards was flown to New Zealand, where a surgeon provided emergency care to treat swelling in his brain. While the accident forced the Rolling Stones to cancel part of their summer tour, Mr. Richards, 62, handily survived his plunge.
âItâs not the first brush with death Iâve had,â Mr. Richards later told Rolling Stone magazine. âI guess what I learned is, donât sit in trees anymore.â
What two of the other three Rolling Stones apparently learned, including Mick Jagger and Charlie Watts, was that Mr. Richardsâs near-death experience meant that it was time to think about their heirs. For that, the aging rockers turned to a reclusive Dutch accountant, Johannes Favie, whose company, Promogroup, has helped them minimize their tax bills for more than 30 years. (The fourth Rolling Stone, Ron Wood, handles his finances apart from Promogroup.)
And so, last August, according to details disclosed in documents maintained by the Handelsregister, the trade registry of the Netherlands, Promogroup helped the three performers set up a pair of private Dutch foundations that will allow them to transfer assets tax-free to heirs when they die. Other Dutch shelters that Promogroup has arranged for the three have already paid off handsomely; over the last 20 years, according to Dutch documents, the three musicians have paid just $7.2 million in taxes on earnings of $450 million that they have channeled through Amsterdam â a tax rate of about 1.5 percent, well below the British rate of 40 percent.
The Rolling Stones are not the only celebrities sheltering income in the land of tulips, windmills and Rembrandt. The rock powerhouse U2 has transferred lucrative assets to Amsterdam, as have other pop singers and well-known athletes, all of whom have used or continue to take advantage of the Netherlandsâ tax shelters, according to a Dutch tax lawyer who requested anonymity because of client confidentiality agreements.
Entertainment companies and others that benefit handsomely from the Dutch shelters include EMI, the giant record label, and CKX Inc., the entertainment company that owns stakes in âAmerican Idol,â the Elvis Presley estate and the soccer pin-up idol David Beckham.
When it comes to attracting celebrity wealth seeking shelter from taxes, the Cayman Islands and other classic Caribbean tax havens are receding in favor like so many waves on the beach, according to tax experts here and overseas. While old-school, offshore tax havens â the warm ones with tropical fish, off-the-shelf holding companies sporting post-office-box addresses, and scant regulation or transparency â still attract money, they are largely patronized, tax lawyers and entertainment bankers say, by hedge funds and private equity firms looking to protect lush trading profits from taxes.
But for earnings derived from intellectual property such as royalties, the Netherlands has become a tax shelter of choice. With celebrities lending their names and images to clothing lines, licensing their hit songs to corporate sponsors, seeking roles in Hollywood and engaging in other ventures that generate significant taxable income, the Dutch system, which does not tax royalties, offers a nifty shelter.
As they flock to Amsterdam, celebrities are taking a leaf out of the playbook of major corporations that also use Dutch tax shelters to help reduce or eliminate the royalty taxes on patents, another form of intellectual property.
âThe Caribbeans are thinking about trading profits, not royalties, so the smaller European countries like Holland have had to be creative, tax-wise,â said David Pullman, an investment banker in New York who caters to entertainers and athletes. âThey are going for the high-end stuff and donât want to be seen as shady like some Caribbean haven.â
OFTEN mentioned as a candidate to receive the Nobel Peace Prize, or, perhaps less seriously, to run the World Bank, U2âs 46-year-old lead singer, Bono, has toured Africa with senior American officials to campaign against AIDS, and hobnobbed with financiers and policymakers while speaking out on global poverty issues at the World Economic Forum in Davos, Switzerland. He even mugged for the cameras in 2000 with Pope John Paul II, who tried on his sunglasses.
U2âs riches are equally well-traveled and, like the Rolling Stones, the band has become sophisticated about finding overseas shelters for its money. When Ireland announced last spring that it would sharply curtail a lucrative tax break for musicians, painters, writers and sculptors, the shift posed a financial threat to U2, which has made the Emerald Isle its financial power base for nearly three decades. The Dublin-born-and-bred rockers built their fortune on hit songs and, in part, on Irish laws that forgive taxes due on royalties.
As of last year, U2 had amassed a net worth of 629 million euros â around $908 million â according to the annual âRich Listâ of top earners in The Sunday Times of Britain. Royalties are the income that artists and athletes earn from recordings, performances, trademarks, brands, patents, copyrights, film rights, product endorsements, videos, films and the ever-extending commercialization of those assets â in short, the major portion of an artistâs or an athleteâs income..
Last June, with the Irish tax break about to shrink, U2 heeded the advice of its longtime business manager, Paul McGuinness, and moved its most lucrative asset â a song-publishing catalog with hits like âWhere the Streets Have No Nameâ and âItâs A Beautiful Dayâ â from Mr. McGuinnessâs firm, located near the Liffey River in Dublin, to Promogroup, which operates beside the elegant Herengracht canal in the heart of elegant, old Amsterdam.
But critics say that U2âs tax move to Holland is threatening to tarnish the halo surrounding the well-regarded, affable and articulate Bono, by lending him a whiff of hypocrisy. After all, unlike Bono, Mr. Jagger is not out campaigning against third-world debt, or writing a foreword for âThe End of Poverty,â the most recent book by the prominent economist Jeffrey D. Sachs..
Bono is a worldwide advocate for greater aid to the developing world, and I applaud him for that,â said Joan Burton, the spokesperson for the Irish Labor Partyâs finance unit and a former cabinet minister, in a telephone interview. âBut obviously the money for that comes from taxation, so itâs very difficult to ask other people to pay tax to contribute to something very worthwhile while at the same time not paying taxes in a very modest environment.
Jeff Swystun, a global director at Interbrand, a brand consulting firm based in New York, said that âthe Stones will always be credible because of a very simple proposition: we want to have a great party.â But U2, he said, âalmost project themselves as a nonprofit, so the tax move doesnât really fit with the brand values that theyâre trying to communicate..â