More fallout on U2's asset move decision

Wow - has this exploded in the newspapers....

The Daily Telegraph has a story today:

U2 move their assets out of Ireland
By Tom Peterkin, Ireland Correspondent
(Filed: 08/08/2006)

The rock band U2 came under criticism yesterday after reports that it has moved a portion of its multi-million-pound business empire out of Ireland for tax reasons.

The band, fronted by Bono, the anti-poverty campaigner, has reportedly transferred some of its publishing company to Holland.

Based in Dublin, U2 have long benefited from the artists' tax exemption introduced by Charles Haughey, the late prime minister. It is reported that the band's move has been made in response to a 170,000GBP cap on the tax-free incomes introduced in the last Irish budget.

Joan Burton, Irish Labour's finance spokesman, said: "Having listened to Bono on the necessity for the Irish Government to give more money to Ireland Aid, of which I approve, I am surprised that U2 are not prepared to contribute to the Exchequer on a fair basis along with the bulk of Irish taxpayers.

"I share Bono's desire to see more resources devoted to Ireland Aid but it is more difficult to make a case for it if everyone is not willing to be part of the social contract that stipulates that everybody should pay their fair share in what is a low-tax country."

Ireland Aid is the channel by which the Irish government helps developing countries.

It would appear that U2 are following the example of the Rolling Stones, who went to a Dutch finance house in 1972.

Until recently U2 Ltd, which deals with the band's royalty payments, estimated to be worth one third of the band's 460GBP million fortune, was based in Dublin. According to documents seen by the Ireland on Sunday newspaper, the company opened up in Amsterdam on June 1.

One of its directors is listed as Jan Favie, a Dutch financial consultant who is also the managing director of similar Dutch-based firms owned by the Rolling Stones.

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And The Irish Independent continues the story....

by Michael Brennan

U2 MAY escape a tax bill of up to 15mEUR by transferring the music publishing wing of their rock empire to the Netherlands.

The supergroup have set up a company to handle the income from their royalties, which would be taxed heavily here when the cap on the artists' tax exemption comes into force next year.

U2 earned around 217mEUR last year and about one-third (72mEUR) came from royalties from record sales, cover versions and radio plays of their songs.

Under the changes introduced by Finance Minister Brian Cowen, 50pc of the band's royalty revenues would be exempt from tax, but the remainder would be taxed at 42pc.

According to financial sources, the move to the Netherlands - where royalties are not directly taxed - could save U2 up to 15mEUR.

Although U2 have not revealed how much they benefited from the artists' exemption scheme, a report from the Revenue Commissioners last year noted that "four individuals" had consistently featured in the list of top 10 earners between 1998 and 2002.

The review, ordered by Mr Cowen before he made his changes to the scheme, did appear to anticipate that financially astute artists would also take action.

"Capping the exemption may not result in any long-term savings as artists may restructure their affairs so that royalties from compositions and writings are diverted to a corporate or other structure (probably located off-shore)," it said.

U2 Limited, which owns all the U2 master tapes, is now based in the Herengracht in Amsterdam. One of its directors is Jan Favie, a 41-year-old Dutchman who masterminded the Rolling Stones' operations in the Netherlands.

A music industry source said the band had always received the best financial advice throughout its 30-year-career. "You cannot fault their operation. It would be the benchmark for every other band in the world," he said.

He pointed out that while other artists had been ripped off in the area of royalty rights, U2 had always negotiated successful deals for themselves.