The original research has been done bij Jesse Frederik, a Dutch journalist with a site called Follow the Money. His more extensive report (also in
Dutch) can be found here.
Follow the money
I had it translated by Google, so it isn't perfect, see below.
Presidential candidate Mitt Romney dodges taxes with private equity fund Bain Capital
Bain Capital, originally founded by the U.S. presidential candidate Mitt Romney, is one of the most successful private equity funds in the world.
Private equity is known for the aggressive method wherein financial hocus pocus and draconian cost not avoided. An essential ingredient for a
successful private equity deal is a tax structure that ideally taxation to an absolute minimum verlaagd.Net like any self-respecting private equity
fund Bain leaves no unused tax benefit. In Bain's web of trust and holding companies appear not only the usual suspects - the Cayman Islands, Bermuda,
Luxembourg - Netherlands but also forms a link in the web tax. Bain, the shares of the acquired in 2004 Irish pharmaceutical company Warner Chilcott
since 2010 housed in a Dutch private company. Presidential candidate Mitt Romney and Bain Capital founder also benefits from the 'Dutch route "of Bain
Capital shows filings with the U.S. regulator and Romney's tax returns.
Bain Capital has already several successful deals as they sit up in May 2004 in the Cayman Islands its eighth fund founder: the Bain Capital Fund
VIII. The first six funds Bain have an impressive return of 82 percent achieved as reflected Bain in a memorandum to potential investors for. More
than 300 investors, including U.S. pension funds, provide the seed capital of $ 3.5 billion for the Cayman Islands-based fund.
Mitt Romney and his wife are also involved. They do not invest along with the regular investors, but with the partners of Bain. Romney left Bain
Capital in 1999 for the Olympic Games in Salt Lake City to organize. As part of his severance Romney may still benefit from Bain deals to 2009.
The Bain Capital Fund VIII has two forms of 'shares': limited partnership interests and general partnership interests. The limited partners (regular
investors) bring almost all the seed into. The general partners (Partner of Bain including Romney) made only $ 3.5 million in. But although the
partners of Bain only 0.1 percent of the capital to make them claim to provide 30 percent of the profit of the fund, private equity concepts even for
a large reward (the standard is 20 percent).
The privilege as a partner of Bain allowed to extend the benefits delivers huge returns. Although partners were brought in only $ 3.5 million profit
participations from September 2010 $ 695 million worth. A yield of 19.750 percent in six years.
This 'golden handshake' also provides tax benefits for Romney. On normal income Americans pay 35 percent tax on "capital" only 15 percent. Since his
departure arrangement is not paid in the form of a salary, but as profit-sharing, the wealthy Romney pays a lower tax rate than many other
Made in 2004, Bain Capital and a consortium of private equity funds, the Irish pharmaceutical company Warner Chilcott of the fair . The consortium set
up a company in Bermuda that Warner Chilcott will take over. The acquisition cost is more than $ 3.15 billion, of which the consortium contributes 1.2
billion and 2 billion borrows. The debt end up in the Bermudian company and must therefore ultimately, as is usual in private equity, be expelled by
Warner Chilcott itself. At the end of the ride, Bain has an interest of 21.2 percent in the Irish producer of vaginal creams and contraceptives.
The majority of the shares of Warner Chilcott is housed in the Bain Capital Fund VIII. Of the 37.5 million shares Bain in September 2010 in his
possession, the Capital Fund VIII, more than 25.7 million, according to a earlier this year by tech blog Gawker leaked Quarterly fund. Warner Chilcott
is a highly successful investment. In September 2010, the market value of the shares at $ 576 million, while according to the quarterly once only $
103 million was paid for the shares.
End of 2006, Warner Chilcott back to the fair . The IPO provides over one billion. The debt is reduced, but also pays Warner Chilcott $ 354 million to
the consortium. Shares will be redeemed and management fees paid. They are the first revenues for Bain and their partners. The real benefit, however,
will only come later. Bain is patient.
In May 2009, the management of Warner Chilcott announces that she intends to move from Bermuda to Ireland. Following the announcement by President
Obama to notorious tax havens such as Bermuda harder to tackle. Ireland does not fit in the row Cayman Islands, Bermuda, Panama, but nevertheless an
attractive fiscal business climate as also recognizes the management of Warner Chilcott. "Ireland has a stable legal and regulatory framework in the
long term 'and' a robust network of tax treaties' allows management an explanation on its plans.
After the big move of Warner Chilcott also changes Bain Capital its structure in August 2010 the shares of Warner Chilcott grouped in a Dutch private
company. Alter Domus , a company that "administrative services" performed for "multinational corporations and alternative investment funds' , provides
The Netherlands is chosen as the location for its tax specialty: the participation exemption . As a Dutch company more than five percent of the shares
in another company persists then there is no need to pay tax on all income from those shares (dividends or profits on the sale of the equity
interest). Combined with our extensive network of tax treaties, this potentially large tax benefits. 'The Netherlands is the world champion
participation exemption, "said Jos Peters tax of tax consultancy Merlyn.
If Warner Chilcott would pay immediate dividends to Bain partnership in the Cayman Islands is 20 percent withholding tax levied in Ireland. However,
if dividends are paid to a Dutch company in Ireland, one is exempt from withholding tax. The Dutch tax levy, by the participation exemption, no
dividend so that the dividend from Luxembourg to flow through to the sunny beaches and unloaded at the Cayman Islands. The same applies to capital
gains on shares - buy ten, selling for twenty - which also remain unloaded by the participation exemption, Irish-Dutch treaties and EU directives.
Most of the gain on the acquisition of Warner Chilcott in the past two years passed. A month after Bain its shares in the Netherlands has placed
Warner Chilcott announced a special dividend of $ 8.50 per share. To this extensive benefits totaling $ 2.15 billion to pay Warner Chilcott is $ 2.25
billion of new debt to. A similar benefit takes place two years later. In September 2012 will Warner Chilcott again a special dividend of $ 4 per
share (cost $ 1 billion). For this lends Warner Chilcott another $ 600 million. One week after the last distribution sales Bain and their private
equity partners, about half of their shares in Warner Chilcott.
Bain since 2010 389 million dollars in dividends richer (and Warner Chilcott 2.85 billion in debt). Bain has the 'Holland route "at least 77 million
to Irish dividend withholding tax saving confirms Jos Peters who also advises major private equity funds. Since the shares of Warner Chilcott in the
Netherlands are housed, Bain furthermore also for $ 334 million of shares sold. "Bain also saves a lot of Irish capital gains tax if the shares are
sold," said Peters.
How Romney and his wife have just invested in Bain Capital Fund VIII is unknown. In 2006, their shares in any case 'over one million' worth according
to the 'public financial disclosure report " that Romney in his campaign in 2008, deposit with the American electoral college. Since then the value
only increased further. The tax returns of Romney and his wife that they in 2010 and 2011 a total of over $ 2,050,000 in dividends received. Their
shares in the fund names in the same period by more than 5.5 million in value.
Romney gets at least a portion of its proceeds in shares. On 10 March 2011 gives Romney 19,799 shares of Warner Chilcott (worth about $ 450,000) to a
non-profit of his son, The Tyler Foundation. Same day reports Bain Capital in the U.S. regulator has done that she shares with its partners in
connection with "charitable donations". Because of its shares to a charity to donate need Romney in the United States no tax to pay on the capital of
its shares. Moreover, Romney's charitable donations are tax deduct.
The Tyler Foundation, the charity of Romney's son, had in 2010, $ 10 million in assets. The foundation donated since its existence is by far the most
to the Mormon church. (If Romney is a Mormon informal obligation about 10 percent of his income to the church to pay.) A close second was Brigham
Young University, Romney's old university, but also the George W. Bush Library scores high with a donation of $ 100,000 in 2010.
Curiously, Romney failed his donation to The Tyler Foundation to deduct from his taxes. Reason being, as Brad Malt, the trustee of his assets
recognized , which in August 2012 Romney claimed he never less than 13 percent tax was paid. If Romney had his donations are deducted, he was among
the 13 percent limit reached. Romney does, however, not to worry. He has another 3 years time as to have his tax return for 2011 to correct.
edit on 5-11-2012 by Spinoza73 because: txt
edit on 5-11-2012 by Spinoza73 because: english translation added