Famous personalities such as Bollywood stars or international sportspersons (e.g. top cricketers) can have high value attached to their images which assist advertisers to sell products incorporating these images (e.g TV adverts, posters, hoardings etc). It is important for these personalities to maximise the revenue streams from their “image rights” and to protect these suitably. This means proper planning including structuring the “ownership” of these rights through suitable vehicles to minimise tax-leakage.
If income derived from these image rights were to flow freely into India, UK, USA or other high tax countries in respect of international services rendered then the famous personality would lose a big chunk of their income or gains due to tax. This tax leakage may be prevented by structuring the ownership of the image rights using an offshore company in reputable low tax jurisdictions such as Jersey or Guernsey (part of the Channel Islands). The Channel Islands are overseas protectorates of the UK and the celebrity may have comfort that their image rights will be properly protected and looked after by regulated professionals in these territories.
The Bollywood star or the international cricketer can have their international income paid to a Jersey or a Guernsey company where the income can be held free of tax until the person decides to collect the income at a suitable or convenient time. The image rights can also be “licensed” to advertisers or sponsors via a separate company in a suitable jurisdiction which has tax treaties with the countries where income arises. The applicable clauses under the double tax treaties will ensure there is minimum withholding tax levied on the income in the paying country.
For long term protection of the famous personality’s wealth suitable trusts can be set-up ensuring their family members will be well looked after in the years to come. It is important for the Bollywood star or the international cricketer to choose a jurisdiction which has robust legislation to hold the image rights, to conserve income and to protect and even enhance the image rights long term