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.
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.
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.