Monthly Archive for February, 2007

Celebrity royalties flow into Dutch tax shelters – International Herald Tribune

Celebrity royalties flow into Dutch tax shelters – International Herald Tribune

It has become painfully clear that when even renowned humanitarians, like Bono of U2, are movings their assets to overseas tax shelters that we have basically create a system of taxation that is fundamentally unfair, because it is a system which no one complies with voluntarily, instead it is a system in which the majority find it to costly to avoid. We comply because it is too expense of the majority of people to pursue other options, like the ones in the article below. Maybe income tax isn’t such a good idea, after all, wealth redistribution has failed, because certain individuals with the highest tax burden find it cheaper to hire lawyers and consultants to avoid their tax liability than to pay it, which means the less well off are force to carry the load. Maybe this is the reason income tax wasn’t in the constitution originally.

Other Dutch shelters that Promogroup has arranged for the three have already paid off handsomely: over the past 20 years, according to Dutch documents, the musicians have paid just $7.2 million in taxes on earnings of $450 million that they have channeled through Amsterdam — a tax rate of about 1.5 percent, compared with the British rate of 40 percent.

The Rolling Stones are not the only celebrities sheltering income in the Netherlands. The rock powerhouse U2 has transferred lucrative assets to Amsterdam, as have other pop singers and well-known athletes, all of whom have used or continue to take advantage of the Netherlands’ tax shelters, according to a Dutch tax lawyer who requested anonymity because of client confidentiality agreements.
Entertainment companies and others that benefit handsomely from Dutch shelters include EMI, the record label, and CKX, the entertainment company that owns stakes in “American Idol,” the Elvis Presley estate and the soccer pin- up idol David Beckham.
When it comes to attracting celebrity wealth seeking shelter from taxes, the Cayman Islands and other classic Caribbean tax havens are receding in favor, according to tax experts here and overseas. While old-school, offshore tax havens — the warm ones with tropical fish, off-the-shelf holding companies with post-office-box addresses and scant regulation or transparency — still attract money, they are largely patronized, tax lawyers and entertainment bankers say, by hedge funds and private equity firms looking to protect lush trading profits from taxes.
But for earnings derived from intellectual property like royalties, the Netherlands has become a tax shelter of choice. With celebrities lending their names and images to clothing lines, licensing their hit songs to corporate sponsors, seeking roles in Hollywood and engaging in other ventures that generate significant taxable income, the Dutch system, which does not tax royalties, offers a nifty shelter.
The Dutch shelter is simple: royalties that flow into or out of a Dutch holding company are exempt from taxes. Although the nominal corporate tax rate in the Netherlands is around 30 percent, analysts say domestic tax shelters bring that rate down substantially.
“For 90 percent of the people who do this, the motivation for using these structures is tax minimization, or avoidance,” said Ton Smit, a tax lawyer at Tax Consultants International in Rotterdam, a firm that caters to celebrities, athletes and multinational corporations seeking to minimize their taxes.

N.Y. Firm Challenges New Attorney Ad Rules one day after they took affect – N.Y. Firm Challenges New Attorney Ad Rules

A high-volume, heavy-advertising New York personal injury law firm and a Washington, D.C., advocacy group are apparently the first to challenge the new attorney advertising restrictions that took effect Thursday, February 1st.

On the same day the new rules were implemented, Alexander & Catalano, with offices in Syracuse and Rochester, N.Y., and Public Citizen Inc. filed a federal lawsuit in the Northern District alleging the restrictions violate the constitutional right to free speech and impose anti-consumer limits on lawyers ads.

The suit, filed Feb. 1 in Albany, N.Y., seeks injunctive and declaratory relief in an attempt to prevent enforcement of the new rules by the disciplinary committees.

“The rules overall are a restriction on free speech,” Gregory A. Beck of the Public Citizen Litigation Group said in an interview. “They are not based on a concern that what is said is false, but on a concern of what some people think is poor taste. The [U.S.] Supreme Court has made clear you cannot regulate speech based on taste.”

Alexander v. Cahill comes as little surprise since several attorneys and advocates had questioned the constitutionality of the revised advertising rules in the Code of Professional Responsibility.


“The amendments appear to be motivated solely by a general distaste for certain forms of lawyer advertising and by discrimination against a certain class of attorneys who assist injured consumers,” according to the lawsuit.

Alexander & Catalano bills itself as the “heavy hitters,” a moniker that is probably barred under the new rules. The firm recently removed the slogan from its advertising materials, “at significant expense and, as a result, will lose benefit of widespread public recognition of its slogan,” according to the lawsuit.

The personal injury firm said it also fears that its routine use of phrases like “think big” and its promise to give clients “a big helping hand” in securing large verdicts or settlements is now prohibited.

Additionally, Alexander & Catalano complains that is has been forced to drop its splashy TV ads, which in the past have depicted its lawyers as towering giants leaping onto rooftops and running to the clients house.

“Because these scenes might be considered techniques to obtain attention and because the fictional traits exhibited by lawyers in these scenes do not appear to be relevant to the selection of counsel, Alexander & Catalano has been forced to alter its advertising campaign to stop running these advertisements,” the suit alleges. “As a result, the firms ability to market its services has been significantly impaired.”

In order to stay current with all the changes, or just read the statutes for yourself, I suggest buying:

It is a must for anyone planning to practice law in NY.