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IRELAND / THE NETHERLANDS: Rolling Stones set the example for U2 in obtaining tax savings through the Netherlands

During the Summer of 2006 it has been reported that the Rolling Stones have over the years achieved considerable tax savings by receiving their royalties through Netherlands companies. These Dutch companies are apparently paying a rather low effective tax rate on the royalty receipts. One of the attractiveness of the Netherlands tax system used to be that rulings were obtainable, which would set the taxable spread of royalty-flow-through companies at certain well-known rates. Since 2001 the taxable spread is to be determined by a functional analysis and a proper bench marking exercise (the spread may in practice then even become less than before!). This does obviously not mean that the ultimate owners and recipients of the royalties did not pay any income or corporate tax on these amounts, and any way that would not be a Netherlands tax issue. Shortly thereafter, it was published that U2 was following the Netherlands example. Apparently the cap Ireland was about to introduce to the beneficial tax system for royalty recipients triggered some tax planning exercises by U2. It was then published that U2 was also going to follow the same route. This news sparked criticism from inter alia Irish politicians, in reaction the manager of U2 stated in public that they live in Ireland, pay taxes all over the world, and like any business are ?perfectly entitled to minimize the tax we pay.?

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