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DiscoLeaks: How ABBA, Julio Iglesias, two Beatles, and dozens of other stars used the Netherlands to avoid paying taxes

It is no secret that U2, The Rolling Stones, and AC/DC have kept their music rights in the Netherlands. But does this also apply to other artists who sold millions of records? Yes, it does! From crooner Julio Iglesias and synthpop band Eurythmics to opera singer Placido Domingo, singer Vaya Con Dios, and Taiwanese pop star Teresa Teng: they all used the Netherlands and Curaçao to evade tax, according to research by Follow the Money.

‘Where do you live?’ It seems like a simple question, but Greek synthesiser-virtuoso Vangelis refused to provide a straight answer in 2019 when a Los Angeles Times journalist posed the question. ‘In Paris,’ he muttered, but only when he was not residing in London, Athens or elsewhere.

It can be dangerous for a superstar who has sold millions of records to tell people where they reside most of the time. Tax authorities read the papers, too. Just ask ABBA's Björn Ulvaeus. He had a private limited company set up in the Netherlands and a public limited company in Curaçao, allegedly already in the mid-seventies.

Those are the main ingredients of the ‘Antilles route’, which was widely exploited until 2006. This tax dodging structure was not a problem for Ulvaeus, because he lived in London. England has a ‘non-dom tax rule’ that is attractive to wealthy foreigners. The rule basically means that the British tax authorities ask few questions about these people’s income and its origin. But when Ulvaeus returned to live in his native Sweden, things went sideways: the Swedish tax authorities demanded 87 million Swedish kronor (equivalent to about 8.5 million euros) in back taxes and interest. In the end, Ulvaeus was acquitted, or so he claimed years later.


Jonathan King, music producer

"I ‘followed the money’. Unfortunately, so did the British tax authorities"

Producer Jonathan King’s offshore structure also fell apart. The British hitmaker had a company in Soest, called King of England. ‘Unfortunately, the British government later introduced new legislation with retroactive effect, which meant that all my savings went to the Treasury,’ King stated via e-mail. ‘That cost me a fortune. I “followed the money”. Unfortunately, so did HMRC!

King had set up the structure on the advice of an American lawyer. As he was the director of this company, he had to come to the Netherlands several times a year. He rather enjoyed these trips. ‘Actually, I was supposed to go to Soest, where the company was officially based, but I usually went to Amsterdam to sign documents. I stayed at the Hilton and did TV shows like Eddy Ready Go and Top Pop.’

The Antilles route

Curaçao hardly levies any taxes and did not have a tax treaty with virtually any country. As a result, other countries imposed taxes in advance when a legal person channelled money to Curaçao. This could be circumvented by first sending the money to the Netherlands.

The Netherlands has a tax treaty with almost every country in the world, allowing money to be transferred at favourable rates from abroad to a company based here. Furthermore, the Netherlands had a favourable tax treaty with the Antilles, which belonged to the Kingdom, so that money could be sent from the Netherlands to the Antilles without extra taxation. In addition, the Netherlands does not levy taxes on outgoing interest and royalties, meaning these could be sent to Curaçao tax-free.

How does a musician get his royalties to Willemstad from, say, Germany or France? It works like this. The public limited company in Curaçao has the intellectual property rights, and licenses them to the Dutch private limited company. The Dutch private limited company, in turn, sublicenses the music to a record company that sells the music in Germany and France. The record company pays the part of the proceeds that goes to the artist as a royalty to the license holder, the private limited company, who then pays it as a royalty to the owner, the public limited company.

In the 1980s and 1990s, the Antilles route came under pressure and slowly but surely, it disappeared. In 1999, the United States and the European Union forced the Antilles to phase out their profitable fiscal structures. A transition period of 20 years was decided, but after 9/11, Washington demanded a faster phasing out of non-transparent fiscal structures. ‘After 2006, the Antilles route no longer worked,’ an anonymous trust employee stated.

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Exodus

According to Swedish media, Ulvaeus had access to his offshore assets through an insurer. His portfolio was ‘wrapped’ as a life insurance. Such ‘insurance wrappers’ are a relatively new tool in the kit of shrewd bankers and lawyers who facilitate tax evasion. But not every tax authority accepts this. Hence the Swedish million-dollar claim against Ulvaeus.

ABBA's Björn is not the only star who has profited from a fiscal structure ran via the Netherlands. Research by Follow the Money shows that one can form a phenomenal all-star band of artists with an Ltd in the Netherlands: Julio Iglesias, George Harrison, Ringo Starr, Robert Palmer, Eurythmics, Vaya Con Dios, Natasha St-Pier, Jimi Hendrix, and Bob Marley's heirs, songwriters Riccardo Cocciante, Andy Hill and Peter Sinfield, Eurodisco kings Giorgio Moroder and Pete Bellotte, Placido Domingo, Teresa Teng, and the new age band Era.

We found the above artists by scraping all the right-holding BVs and NVs listed on Discogs. Discogs is an online database of artists and their albums; users can also sell LPs, CDs and cassettes. The site urges users to note as much metadata as possible when entering each release, including the holder of the various music rights (see infographic below).


David Japp, former artist manager

"A record company often uses a middle man to make everything more obscure, enabling it to slice away a larger share of the artists’ income"

We couldn’t find all the artists who have lived in the Netherlands on paper only. Insiders told us that UB40 and Paul Simon also have (or had) a Dutch base, but we were not able to trace them via Discogs.

Big music publishers like Universal and Sony/ATV have offices in Hilversum. Artist manager David Japp used to be active in the British music industry and remembers that his employer at the time had all his artists’ rights run through the Hilversum company Intersong. ‘Intersong was part of Polygram,’ he said over the phone. ‘Using such parties as a middle man will have tax advantages, but a record company also uses them to make everything more obscure, enabling it to slice away a larger share of the artists’ income.’

A few musician’s Dutch Ltds are still active, such as those of The Rolling Stones, U2, AC/DC, and Riccardo Cocciante, but most of them have been dissolved. The Netherlands is still used for offshore structures for musicians, but tax havens such as England, Luxembourg, the Bahamas, Jersey, Guernsey, and Cyprus have been the most common in recent years.

Money, money, money

The (sub)licence holders are usually mentioned in the small print on the record sleeve or in the CD booklet. This way, rights organisations such as Buma/Stemra and Sena can check which royalties they have to pay to which rights holder. These listings also come in handy when someone wants to buy or rent the music rights for a film, a sample, or a commercial.

By cross-referencing the names of the Ltds and PLCs on Discogs with information from the trade registers of the Netherlands and Curaçao, we determined which routes were used and who facilitated them. One problem, however. is that the trade register archives are experiencing ‘dementia’, a common ailment for government archives. It was no longer possible to determine the exact origin of every company. Trade register histories, annual reports, and articles of incorporation are often impossible to find, even after a manual search by CoC employees.

Yet it was obvious that the Antilles route was the most popular. A trust agency often lent a helping hand, as MeesPierson Trust did with ABBA member Björn Ulvaeus. ‘MeesPierson was one of the first to offer this service to foreign musicians,’ Willem van Kooten said. Van Kooten started as radio DJ Joost den Draaijer and later founded a record company, Red Bullet, which released music from, amongst others, Golden Earring, Shocking Blue, and Bolland & Bolland.

​Besides MeesPierson, the name Intertrust crops up regularly. That company was founded by the world-famous trust pioneers Eppo Koopmans from Amsterdam, and Gregory Elias, from Curaçao. Intertrust specialised in athletes and musicians. It was Koopmans himself, for instance, who had Spheric Ltd, the keeper of Vangelis' rights, registered in the Netherlands, while Elias became director of Cymbalex PLC, the sole shareholder of Spheric in Curaçao.


Former trust employee

"The Netherlands does not levy any tax on royalties earned abroad, so you evade them that way"

Nowadays, Elias is best known as the man who had The Rolling Stones perform in Cuba. Why he set that up? Curaçao is one of the few countries that have a tax treaty with Cuba. ‘Gregory wanted to do business in Cuba and realised the importance of a free concert,’ said sports commentator and Elias’s friend Johan Derksen about The Rolling Stones’ performance in Havana.

Other facilitators that regularly surface in Dutch companies of pop stars are (predecessors of) trust agencies TMF, JTC, and Vistra. In two cases – for Placido Domingo and the Austrian singer and songwriter Rainhard Fendrich – the structure was routed via Liechtenstein. ‘Usually, this was done via the Antilles, but Luxembourg was also used,’ said a former trust employee who assisted musicians back then. ‘My client received his royalties in the Netherlands, mainly through his record company. The Netherlands does not levy any tax on royalties earned abroad, so you evade them that way. You can safely say that the only reason for setting it up this way is fiscally motivated.’

‘A foreign artist’s royalty stream flows in and out of a Dutch company without any interference,’ Willem van Kooten confirmed. For years his company Red Bullet was the director of Ganga Publishing, the Dutch company of former Beatles member George Harrison. ‘I received the Benelux rights from Ganga, in exchange for which I had to sign a document a few times a year. I saw Harrison once in Blokker in 1964. Unfortunately, a business lunch with Harrison was not part of the deal.’

Gimme, gimme, gimme

The Ltds and PLCs that we found are often not officially owned by the musicians; they are usually merely the benefactors. Because they are not the owners, it is even more difficult to tax them. Ulvaeus, for example, was only the indirect owner of the PLC in the Antilles, Swedish media reported, following the tax authorities’ lawsuit against the ABBA member. This also applied to Vangelis and Spheric Ltd, former Intertrust employee Adriaan Brouwer stated. Brouwer was on the board of this Ltd.‘For your information, Spheric was never owned by Vangelis or any of the other artists whose rights we represented’.

Dossier

Dossier: Moneyland Nederland

Follow the Money reports about the offshore world, where anybody who has something to hide, can stash and spend their money.

Volg dit dossier

Hence, it was key to work with reliable trust agencies; otherwise, someone could grab the music rights. That is what happened to Rusty Egan, a legendary London nightclub owner and artist who ran a music publishing company with Soft Cell as its biggest act. ‘Rusty has nothing left. He is very upset about that,’ his manager David Japp told Follow the Money. ‘His now-deceased business partner was a thief and a swindler, who cheated Rusty out of his shares. Unfortunately, that is difficult to prove. I am trying to find out exactly what happened, but it is difficult because it was so long ago.’

Jimi Hendrix’s father, Al Hendrix, was shocked to discover in 1993 that his former lawyer was trying to sell the rights to Jimi’s music for 30 million dollars. After Jimi’s death, Al had put the lawyer to work setting up an offshore structure for rights management with companies in Panama, the Netherlands, and the British Virgin Islands. The Dutch component in this offshore structure is the Licensing Office for Music Rights (Elber) Ltd. Father Al was completely unaware that he had ‘signed away’ these rights, he claimed. Microsoft founder and Hendrix fan Paul Allen assisted Al financially with the ensuing lawsuit.

The winner takes it all

Brouwer emphasises that the tax authorities knew what Intertrust did for musicians. ‘For the record: the recipe that  limited companies used for the flow of dividends and royalties was well known, and everything was conducted under the watchful eye of the tax authorities.’ The anonymous former trust employer confirms this. ‘For our Ltds, we always received an advanced tax ruling from the Dutch tax authority.’

This is all the more remarkable because the Dutch tax authorities can be quite strict with Dutch musicians. Singer Guus Meeuwis was stopped in his tracks by the tax office when he attempted to route his royalties via a company in Curaçao. A series of renowned DJs, including Afrojack, Tiësto, and Headhunterz, have been at loggerheads with the tax authorities over their offshore structures. Afrojack (real name: Nick van de Wall) has since emigrated to Dubai.


Willem van Kooten, dj and producer

"The Dutch tax authorities are nicer to foreign artists than they are to Dutch ones"

‘For Dutch artists, a structure like this makes little sense; the tax authorities here tax their entire income, worldwide,’ said a service provider from this sector. ‘The Dutch tax authorities are nicer to foreign artists than to Dutch ones,’ record label executive Willem van Kooten stated. ‘I can see why Afrojack emigrated. Stars from abroad are welcomed with open arms, because that is supposedly good for the lawyers and accountants at the Zuidas. Meanwhile, the tax authorities are chasing Dutch artists out of the country. I think it is a disgrace’.

​Other facilitators are less talkative than Van Kooten. ‘I don’t remember; it was thirty years ago. You should call someone else,’ is the only thing George Nicolai would say when we asked him about his involvement with George Harrison’s Bob Marley Foundation and Ganga Publishing. Tony Izelaar, involved in Ulvaeus’ Curaçao company, said he prefers ‘not to talk about clients and client entities’. ‘I take it that you understand my position.’

Exile on Mainstreet

The large number of British artists who have come to the Netherlands, following in the footsteps of The Rolling Stones, is remarkable. Nowadays, the UK may be a tax haven for the rich, but in the 1970s, the tax climate was rough. High top rates and tax stacking meant that the tax burden sometimes even exceeded 100 per cent.

‘It was really bad in England in the seventies,’ remembers Van Kooten. ‘The first artists left in the sixties. Songwriter Mitch Murray moved to Amsterdam for part of the year, so I bumped into him sometimes. He told me that he had left because his rate in England had risen to 110 per cent due to tax stacking.'

The Stones faced arrears with the British tax authorities, partly due to a careless manager, and realised that they would not be able to cover these arrears by simply continuing to work as usual: the rates were simply too high. The band members were forced to move to the south of France, where they recorded the album Exile on Main Street.

"Companies and wealthy individuals left Sweden. Ikea, for instance, settled in the Netherlands. And we now know that ABBA did too."

Financially, The Rolling Stones moved to Amsterdam. Promotone, the company handling their business, is located on the Herengracht and is owned by a foundation of which the permanent band members are directors. Unlike most of the artists mentioned here, it is not a shell company. Promotone also handles business for the Irish band U2, the Irish singer Sinéad O’Connor, and before that, for Cat Stevens and reggae star Peter Tosh. Stevens had a series of companies in the Netherlands for his impressive oeuvre.

The Swedish government’s fiscal reign of terror in the 1970s led to the departure of companies and wealthy individuals. Ikea, for instance, settled in the Netherlands. And we now know that ABBA did too.

Conquest of Paradise

The table below lists foreign artists with a Dutch private company (Ltd) and possibly a PLC in Curaçao. Where possible, we provide a brief explanation of the underlying fiscal construction. Please note: the Ltd or PLC has not necessarily been set up at the initiative of the artist concerned. There is a lively trade in music rights; the Ltds could belong to an investor.

Links under the artists’ names lead to Wikipedia; pictures of the artists involved are sourced from Wikipedia/Wiki Commons, and when not available, from Discogs. Where two trust agencies are mentioned, the first is involved in the setting up, and the second is the last known.

Note: Occasionally, phonographic copyright, indicated by ℗, is applicable. Unlike classical copyright, indicated by ©, phonographic copyright is bound to a specific recording of a copyrighted work.