According to reports in the Irish and British media, the band has decided to set up a company to handle income from royalties in the Netherlands to avoid a sharp increase in taxation as a result of new restrictions on Ireland's artists tax exemption, brought in by Finance Minister Brian Cowen in the last Finance Bill.

This change, initiated amid a general crackdown on tax breaks for wealthy individuals and business people, will bring about a EUR250,000 cap on tax exemptions for artists in Ireland.

According to a report in the Irish Independent, U2 Limited, which owns the rights to all of the band's works and is said to be worth about one-third of its EUR680 million fortune, is now based in the Herengracht in Amsterdam. The Dutch authorities do not levy a direct tax on royalties, and it is thought that move will save the band about EUR15 million in tax.

The strategy was reportedly masterminded by Jan Favie, who is also the managing director of similar Dutch-based firms owned by the Rolling Stones, who, it emerged last week, have paid just 1.6% of their GBP242 million royalty income in tax over the last twenty years thanks to astute tax planning.