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The Tax Prophet Newsletter   Issue # 40 September, 2006

REDUCE TAXES!
CHECK OUT THE TAX PROPHET'S Action Guides


In This Issue:
Introduction
Dutch Tax Haven
Foundations
U2 Says "Me Too"
Conclusion


A Tax Haven for
Rock Stars


Introduction

When 62 year old Keith Richards of the Rolling Stones, fell out of a tree while vacationing in Fiji, the repercussions went far beyond the emergency surgery on his noggin.

The Stones decided to get their estate-planning affairs in order to forestall any disputes among their heirs and the public caught its first glimpse on how international rock stars handle their finances.

Dutch Tax Haven

It turns out that if you are an international performer, Holland will protect you against your home country's tax collector.

Documents published in Holland indicate that the Rolling Stones, who started banking in Holland in 1972, have used offshore trusts and companies to obtain tax breaks.


Foundations

Stones' members (Jagger, Watts and Richards) have forked over their estates to two foundations in Holland. The foundations control the rights to the Stones' music, performances, merchandise and films. Why do this? Because, there is no direct tax on royalties under Dutch law.

The result: The Stones have paid just 1.6 percent tax on their earnings of roughly $400 million over the past 20 years!


U2 Says "Me Too"

Dublin based U2, the pride of Ireland, evidently has followed the Stone's footpath to Holland by shifting its multi-million business out of Ireland for tax reasons. Recently, Ireland's artists' tax exemption has been limited to the first $250,000 of earnings per year.

This tax change prompted U2 Ltd, the entity that deals with the band's royalty payments, estimated to be one third of the band's $600 million fortune, to set up shop in Amsterdam.


Conclusion

Just like the multi-national corporations, international performers are shifting their companies to low-tax countries.

While income received by performing in a country may be taxed by that country, the international sales of merchandise and licensing of music,pictures and videos are taxed where the seller is located.

It looks like the Rolling Stones and U2 have settled on Holland as their tax-haven of choice.



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All contents copyright 1995-2006 Robert L. Sommers, attorney-at-law. All rights reserved. This newsletter provides information of a general nature for educational purposes only and is not intended to be legal or tax advice. This information has not been updated to reflect subsequent changes in the law, if any. Your particular facts and circumstances, and changes in the law, must be considered when applying U.S. tax law. You should always consult with a competent tax professional licensed in your state with respect to your particular situation. The Tax Prophet is a registered trademark of Robert L. Sommers.