U2 face closure of loophole they used to avoid paying their taxes
Netherlands is reforming its tax system to clean up its image and lure real investment
A balloon erected in front of the stage at Glastonbury where U2 were playing in 2011.
The low-tax music could soon be over for U2 and the Rolling Stones as the Netherlands plans to close a loophole that rock bands use for royalty payments.
The Netherlands is reforming its tax system to clean up its image and lure real investment rather than shell companies to the country.
Amongst other measures its parliament is considering taxing businesses that pay royalties in other countries with lower tax rates, or that the EU has deemed “non-co-operative”.
Such a move would close a loophole used by rock bands such as U2 and the Rolling Stones to manage royalty payments from their records and performances.
The bands license their copyright to companies that they set up in the Netherlands, which in turn license it to companies in other countries.
While the Netherlands companies receive the bands’ global royalties, they only pay tax on what is earned in the Netherlands itself, allowing the groups to cut their tax bills.
U2 can earn around €5 million a night from its concerts, promoter John Giddings told the BBC last month.
The band moved some of its businesses from the Republic to the Netherlands earlier this century after the Government capped a previously unlimited tax break on artistic earnings at €250,000 a year.
The Irish band, whose frontman Bono advocates for causes such as justice for poorer countries, has come under fire in recent years for its tax structures.
Protestors turned up with a banner asking “U pay tax 2?” when the group headlined Glastonbury Festival in Britain in 2011.
The musicians argued that they had their businesses structured so they paid sensible amounts of tax.
The EU views the Netherlands as a low-tax jurisdiction. The country offers breaks to multi-nationals that set up head offices there.
It was the “meat” in the double-Irish Dutch sandwich, a structure also based on licensing intellectual property, used by multi-nationals with operations in the Republic to limit their tax bills.
Until the Irish Government closed the loophole in 2016, vulture funds such as Cerberus used a combination of Irish and Dutch companies to reduce taxes.
While the Netherlands is looking to change some of its tax rules, its government is also considering cutting levies on corporate profits and dividends paid to company shareholders. Additional reporting: The Financial Times