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U2’s lead singer, Bono, has been “hurt” by claims he is a hypocrite for agreeing to move part of the band's business to the Netherlands to avoid paying higher taxes in Ireland.

Oxfam, Concern and many Catholic missionary orders claim that U2 has deprived Ireland of much-needed revenue for social services and overseas aid.

The band moved some of its financial affairs to Holland in 2006 following a government decision to impose a £250,000 cap on its generous tax-free earnings system for artists. In Holland the tax rate on royalty earnings is lower than Ireland’s.

"There is nothing illegal about what they have done in taking advantage of more favourable tax laws but, given Bono has invested so much in promoting an end to poverty, we see a contradiction there,” Nessa Ni Chasaide, of the Debt and Development Commission, told the Government this week.

In interview with the Irish Times, Bono, whose new album goes on sale today, said: ”We pay millions and millions of dollars in tax. The thing that stung us was the accusation of hypocrisy for my work as an activist.

“I can understand how people outside the country wouldn’t understand how Ireland got to its prosperity but everybody in Ireland knows that there are some very clever people in the Government and in the Revenue who created a financial architecture that prospered the entire nation.

“It was a way of attracting people to this country who wouldn’t normally do business here and the financial services brought billions of dollars every year directly to the Exchequer.

“What’s actually hypocritical is the idea that then you don’t use a financial services centre in Holland. The real question people need to ask about Ireland’s tax policy is:’Was the nation a net gain benefactor?’ and of course it was – hugely so.

“So there was no hypocrisy for me. We’re just part of a system that has benefited the nation greatly and that’s a system that will be closed down in time. Ireland will have to find other ways of being competitive and attractive.”

When told that Christian Aid had mentioned him in a 2007 report called Death and Taxes: The True Toll of Tax Dodging, he replied: ”It hurts when the criticism comes internationally.

“But I can’t speak up without betraying my relationship with the band. So you take the s***. People who don’t know our music – it's very easy for them to take a position on us, they run with the stereotypes and caricature of us.”

Bono’s song-writing partner, the Edge, said the band would not comment on the tax move. “It’s our own private thing. We do business all over the world, we pay taxes all over the world and we are totally tax compliant,” he said.

He said that plans to build a U2 tower in Dublin’s docklands were, in light of the recession, now on hold.

Ireland’s tax exemption scheme for artists was introduced in 1969 and attracted many famous names, including the Rolling Stones.

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