Bono's capitalist tool
Bono may be celebrated for browbeating world leaders into funding debt relief for developing countries, but his Irish rock band is facing criticism for switching its financial affairs overseas to avoid paying higher taxes.
U2’s move has been revealed as Bono’s CaliforniaÂbased venture capital firm, Elevation Partners, confirmed it had invested about $300-million in Forbes, the United States business magazine frequently described as the “capitalist tool’‘.
Irish politicians have expressed surprise at U2’s decision to move part of its multimillion-dollar operation from Ireland to Amsterdam. The tax rate on royalty earnings in The Netherlands—where many of the Rolling Stones’s assets are based—is only a few percent.
U2’s changeover may have been triggered by reforms announced last December by the Irish Finance Minister, Brian Cowen, who imposed a cap of â,¬250Â 000 on tax-free incomes for artists resident in the republic.
Before the cap, the scheme attracted many famous names to Ireland.
But the government came under pressure to curtail the incomes of those benefiting disproportionately from the scheme.
At the time Cowen said: “We cannot stand over a situation in which some high-earning tax residents, through the use of incentive reliefs, can reduce their taxable income to nil.’‘
The Irish Labour Party’s finance spokesperson, Joan Burton, said this week: “HavingÂ listened to Bono on the necessity for the Irish government to give more money to Ireland Aid ... I am surprised that U2 are not prepared to contribute to the exchequer on a fair basis along with the bulk of Irish taxpayers.’‘
Corporation tax in Ireland is only 12,5%. The standard rate of personal tax is 20%, rising to a top rate of 42%. The band had been able to claim artists’ tax relief as songwriters, but the scheme did not cover income from tours and performances.
Alongside Bob Geldof, Bono has spent years cajoling US presidents and other world leaders into increasing debt relief to poorer countries, improving aid to Africa and helping Aids victims. U2’s donations to aid organisations have always remained anonymous, although the royalties from several of their songs have been given to charities.
The band will continue to live and work in Ireland, paying other taxes, an industry source said. Like other bands, the source added, U2 “try to be as tax efficient as possible’‘.
Principle Management, which controls U2’s financial affairs, would not comment.
Elevation Partners is a private venture capital firm with six partners, one of whom is Bono. It has an estimated capital value of $1,9-billion. U2 were said to be the world’s most lucrative group last year, earning more than â,¬210-million.
Their success, however, has generated signs of resentment.
Proposals to construct a so-called U2 Tower—the tallest residential development in Ireland on the southside of the Liffey river—have drawn complaints from locals in Dublin’s Ringsend. The tower, a 31-floor construction, will house luxury apartments and provide space for the band’s recording studios.
The building was originally scheduled to be 60m high, but last month permission was granted for it to rise to 100m. “This tower is going to appear as a monstrosity in what used to be a small maritime village,’’ Damien Cassidy of the Ringsend Environmental Group told BBC radio earlier this week.—Â