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Gordon Thring (Thring) worked in the C&L Los Angeles office.
He drafted a letter to Santandreu based on conversations he had
with Forsyth. The letter to Santandreu was marked “September
draft”, and it stated that C&L had reviewed the advice from the
June 4, 1986, letter to take into account recent tax code changes
and the recently signed income tax treaty between the United
States and The Netherlands with respect to the Netherlands
Antilles. The letter affirmed C&L’s recommendation for Medieval
Times to use a three-tier corporate structure as suggested in the
June 4, 1986, letter. The ostensible advantages of the
three-tier structure included limiting U.S. withholding tax to
5 percent for dividends paid to Dutch companies and zero percent
for interest paid to Dutch companies, and dividend income from
the U.S. company would be tax-exempt in The Netherlands.
A section in the September draft letter discussed royalty
payments on intangible assets. The letter stated: “We
understand that it is intended to license M.T.U.S. [Medieval
Times U.S.] to use the ‘Medieval Times’ concept and any material
that may be copyrighted.” C&L suggested the use of a Barbados
company to license the intangibles to a Dutch company that would
in turn license them to the Medieval Times U.S. companies. C&L
stated that the advantage to this arrangement was that the
royalty income would not be subject to withholding tax in the
United States or in The Netherlands.
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