According to an investigation by the Dutch newspaper de Volkskrant and the Dutch financial journalism organization called Follow the Money, Bain Capital apparently dodged some €80 million ($102 million) in taxes by using a loophole in the Netherlands— some of which found its way into Mitt Romney's pocket. It's sort of complicated (and a test of our Google Translate and tax knowledge) but apparently it has to do with Bain and Romney, Romney being able to reap the benefits of his Bain retirement package in 2011, and some $389 million in dividends the company made off of an Irish pharma company called Warner Chilcott which Bain acquired in 2004. It also helps to know things like capital gains, and a handy thing called "participation exemption" in the Netherlands.
All that said, here's the digestible Radio Netherlands Worldwide's translation of del Volkskrant :
Then two years ago, Bain registered its interest in Warner Chilcott with the private Dutch company Alter Domus, which provides administrative services for multinational corporations and investment funds. If a Dutch company owns more than five percent of the shares in another company, then that other company is exempt from paying taxes on all capital gains.
Through exemptions like that and a host of other complicated tax treaties, the Netherlands offers huge tax breaks to companies like Bain, which is reported to have evaded 80 million euros in dividend taxes by running through the Netherlands. ...
By examining Bain’s filings with US regulators, Dutch Chamber of Commerce documents and those made public by Gawker, and even Romney’s own tax returns, Monday’s report says Romney has been able to financially benefit from the 'Dutch route' as well.
The investigation says that there is a discrepancy between Romney’s tax filings and the tax-exempt Warner Chilcott shares he donated to his son’s charity in 2011, worth about $450,000.
The investigation's author, Jesse Frederik, even commented over at Political Wire with a simpler explanation:
Just to be clear: Romney didn't avoid $80 million in Irish dividend withholding taxes, but a Bain fund he invests in [did]. The Bain fund also avoided an unknown amount (probably tens of millions) of Irish capital gains tax. Romney received $2.1 million in dividends from the fund in 2010/2011 and $5.5 million in capital gains.
The full investigation by Follow The Money/de Volkskrant can be found here.
- Investment & Company Information
- Mitt Romney
- Bain Capital
- Warner Chilcott