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| The Tax Haven Team in Monaco | The Tax Haven Team in Monaco |
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| MONACO — Monaco may seem almost comically tiny, less a real country than a glorified safe deposit box festooned with palm trees and Lamborghini dealerships, but it teems with interesting statistics. Population: 35,427. Number of nationalities represented: 125. Unemployment rate: 0 percent. Income tax rate: 0 percent. | MONACO — Monaco may seem almost comically tiny, less a real country than a glorified safe deposit box festooned with palm trees and Lamborghini dealerships, but it teems with interesting statistics. Population: 35,427. Number of nationalities represented: 125. Unemployment rate: 0 percent. Income tax rate: 0 percent. |
| Number of soccer-team-owning Russian billionaires feuding with French soccer officials: one. | Number of soccer-team-owning Russian billionaires feuding with French soccer officials: one. |
| That would be Dmitri Rybolovlev, a potash fertilizer tycoon who in 2011 expressed his support for his adopted country by buying a majority stake in its struggling soccer team, A.S. Monaco, and proceeding to aggressively vacuum up expensive European players. | That would be Dmitri Rybolovlev, a potash fertilizer tycoon who in 2011 expressed his support for his adopted country by buying a majority stake in its struggling soccer team, A.S. Monaco, and proceeding to aggressively vacuum up expensive European players. |
| Deep-pocketed foreign owners, like Roman Abramovich at Chelsea and the Qatar Investment Authority at Paris St.-Germain, are a euro a dozen over here these days. But Monaco is different from other countries. Rybolovlev can offer players not just hefty wages, the chance to hobnob with other rich sportspeople, and the excitement of living in a sunny place that takes just 45 minutes to walk across (more, if you stop for lunch): he can offer them liberation from the petty annoyance of income tax. | Deep-pocketed foreign owners, like Roman Abramovich at Chelsea and the Qatar Investment Authority at Paris St.-Germain, are a euro a dozen over here these days. But Monaco is different from other countries. Rybolovlev can offer players not just hefty wages, the chance to hobnob with other rich sportspeople, and the excitement of living in a sunny place that takes just 45 minutes to walk across (more, if you stop for lunch): he can offer them liberation from the petty annoyance of income tax. |
| This is a happy prospect no matter what you earn; it begins to look like bliss when you count your income in millions. And it puts the rest of the French league at a significant disadvantage. While Monaco basks in its special tax status, players for French teams are subject to the kind of high tax rates that recently motivated the actor Gérard Depardieu to renounce his citizenship, acquire a Russian passport and lumber screaming for the non-French hills of Belgium. | This is a happy prospect no matter what you earn; it begins to look like bliss when you count your income in millions. And it puts the rest of the French league at a significant disadvantage. While Monaco basks in its special tax status, players for French teams are subject to the kind of high tax rates that recently motivated the actor Gérard Depardieu to renounce his citizenship, acquire a Russian passport and lumber screaming for the non-French hills of Belgium. |
| “Frankly, you can say that it is unfair, that everyone must be on the same level,” said a Monaco government official, speaking on condition of anonymity because he did not want to be seen criticizing his country. “Because of its tax situation, Monaco is in a very special position.” | “Frankly, you can say that it is unfair, that everyone must be on the same level,” said a Monaco government official, speaking on condition of anonymity because he did not want to be seen criticizing his country. “Because of its tax situation, Monaco is in a very special position.” |
| “Special” is one way of putting it. It’s like having a major league baseball team in the Cayman Islands. | “Special” is one way of putting it. It’s like having a major league baseball team in the Cayman Islands. |
| The French soccer league has grumbled about Monaco’s exceptional situation in the past. But now, alarmed by the team’s sudden winning streak and unnerved by its 120 million-or-so euro (about $157 million) acquisition of three great players — João Moutinho and James Rodríguez from Porto and Radamel Falcao from Atlético Madrid — it finally did something. In March, it decreed that starting next June, any team playing in the French league would have to be based in France and subject to French taxes. | |
| For “any team,” read “Monaco.” | For “any team,” read “Monaco.” |
| “Monaco belong at the top level of French football,” the league’s president, Frédéric Thiriez, said at the time. “It is therefore all the more important that the club adheres to French rules, especially in relation to tax, so that every club in the league is on a level playing field.” | “Monaco belong at the top level of French football,” the league’s president, Frédéric Thiriez, said at the time. “It is therefore all the more important that the club adheres to French rules, especially in relation to tax, so that every club in the league is on a level playing field.” |
| Among other things, Thiriez said, Monaco had backpedaled on its promise to acquire a certain percentage of French players, who are required to pay French taxes even if they live in Monaco. Monaco has also focused its purchases on European clubs other than French ones, upsetting rival French clubs by failing to share its wealth through transfer fees. | Among other things, Thiriez said, Monaco had backpedaled on its promise to acquire a certain percentage of French players, who are required to pay French taxes even if they live in Monaco. Monaco has also focused its purchases on European clubs other than French ones, upsetting rival French clubs by failing to share its wealth through transfer fees. |
| “The problem has been considerably exacerbated by the financial crisis, the drop in TV rights in France, the arrival of a shareholder with apparently unlimited resources at the head of Monaco and, above all, a transfer strategy oriented 80 percent toward foreigners,” Thiriez said. | “The problem has been considerably exacerbated by the financial crisis, the drop in TV rights in France, the arrival of a shareholder with apparently unlimited resources at the head of Monaco and, above all, a transfer strategy oriented 80 percent toward foreigners,” Thiriez said. |
| Not surprisingly, A.S. Monaco was not pleased by the league’s decision. Nor did the team like the French Football Federation’s proposed compromise that would allow the club to pay a one-time fee of 200 million euros, or about $263 million, to the other clubs in exchange for being allowed to stay in Monaco. Extortion, the team said. “The position of the club is very clear: A.S.M. F.C. considers that such a demand is not only outrageous, but also totally unacceptable.” | |
| With negotiations, such as they were, at an impasse, the team appealed to the Conseil d’État, France’s highest administrative court, arguing that the league’s new residency requirement violated “several fundamental principles of French and European law.” These include, the team said, “the principles of free movement, free competition, free access to sporting competitions, and also the Franco-Monégasque tax convention signed on the 18 February 1963.” | With negotiations, such as they were, at an impasse, the team appealed to the Conseil d’État, France’s highest administrative court, arguing that the league’s new residency requirement violated “several fundamental principles of French and European law.” These include, the team said, “the principles of free movement, free competition, free access to sporting competitions, and also the Franco-Monégasque tax convention signed on the 18 February 1963.” |
| A ruling is not expected for at least several months, but the issue is laced with bad feeling. Some rival teams, upset that Monaco has put itself in prime position to seize one of France’s two assured spots in the lucrative Champions League, have talked of boycotting Monaco if it fails to move to France. Others have expressed sympathy for a team that could excite television fans, rouse French soccer from its prolonged malaise and bring in revenue, if not necessarily at home. | A ruling is not expected for at least several months, but the issue is laced with bad feeling. Some rival teams, upset that Monaco has put itself in prime position to seize one of France’s two assured spots in the lucrative Champions League, have talked of boycotting Monaco if it fails to move to France. Others have expressed sympathy for a team that could excite television fans, rouse French soccer from its prolonged malaise and bring in revenue, if not necessarily at home. |
| That is another issue: some critics believe that Monaco is a silly place to have a world-class team in the first place. Its grand stadium, Stade Louis II, has room for 18,500 spectators, but even with blocs of tickets handed out to businesses, the games rarely draw more than 7,000. | That is another issue: some critics believe that Monaco is a silly place to have a world-class team in the first place. Its grand stadium, Stade Louis II, has room for 18,500 spectators, but even with blocs of tickets handed out to businesses, the games rarely draw more than 7,000. |
| “The problem is that they just don’t have a fan base,” said Philippe Auclair, who writes about French soccer and is not a fan of Monaco. “The 73 fans they do have are going to be angry with me, but they are an artificial club. Football clubs are generally born from youth associations, parish teams or groups of fellow workers rooted in a community. But what community is there in Monaco apart from millionaire tennis players and tax evaders?” | “The problem is that they just don’t have a fan base,” said Philippe Auclair, who writes about French soccer and is not a fan of Monaco. “The 73 fans they do have are going to be angry with me, but they are an artificial club. Football clubs are generally born from youth associations, parish teams or groups of fellow workers rooted in a community. But what community is there in Monaco apart from millionaire tennis players and tax evaders?” |
| One option would be to look for fans outside Monaco, in southeastern France, he said, “but those fans can’t stand Monaco anyway.” Completely false, people in Monaco say. For one thing, the team has been around for nearly 100 years, some of them pretty glorious. In 2004, it made the Champions League final, losing to Porto, 3-0. When France won the World Cup in 1998, four of the players on the national team were from the Monaco team. | One option would be to look for fans outside Monaco, in southeastern France, he said, “but those fans can’t stand Monaco anyway.” Completely false, people in Monaco say. For one thing, the team has been around for nearly 100 years, some of them pretty glorious. In 2004, it made the Champions League final, losing to Porto, 3-0. When France won the World Cup in 1998, four of the players on the national team were from the Monaco team. |
| “A.S.M. F.C. has been affiliated to the French Football Federation since 1919 and has, over a long period of time, invested significant sums into French football,” Rybolovlev said recently. “The club has contributed many players to the French national team and proudly represented French football in European competitions. I therefore do not understand the lack of recognition of this contribution from the French football authorities.” | “A.S.M. F.C. has been affiliated to the French Football Federation since 1919 and has, over a long period of time, invested significant sums into French football,” Rybolovlev said recently. “The club has contributed many players to the French national team and proudly represented French football in European competitions. I therefore do not understand the lack of recognition of this contribution from the French football authorities.” |
| Speaking after the Europa League final recently, Michel Platini, the president of UEFA, which governs European soccer, said he felt puzzled by France’s attitude toward Monaco. “I find it a little difficult to understand,” Platini said, according to The Guardian. “It’s as if French football always liked Monaco so long as they didn’t win.” | Speaking after the Europa League final recently, Michel Platini, the president of UEFA, which governs European soccer, said he felt puzzled by France’s attitude toward Monaco. “I find it a little difficult to understand,” Platini said, according to The Guardian. “It’s as if French football always liked Monaco so long as they didn’t win.” |
| Jérôme de Bontin, a former A.S. Monaco president who is the general manager of the New York Red Bulls, said that the team was crucial to Monaco’s sense of itself — and to its ruler, Prince Albert II, a passionate soccer fan. “Now, with the support of the new owner, we have the opportunity again to have a flag carrier, a good ambassador for the principality,” he said. | Jérôme de Bontin, a former A.S. Monaco president who is the general manager of the New York Red Bulls, said that the team was crucial to Monaco’s sense of itself — and to its ruler, Prince Albert II, a passionate soccer fan. “Now, with the support of the new owner, we have the opportunity again to have a flag carrier, a good ambassador for the principality,” he said. |
| Without the chance to earn much stadium revenue, Monaco is entitled to advantages elsewhere, de Bontin said. He attributed France’s attitude to ingrained jealousy and suspicion. | Without the chance to earn much stadium revenue, Monaco is entitled to advantages elsewhere, de Bontin said. He attributed France’s attitude to ingrained jealousy and suspicion. |
| “The socialist government seems to have targeted the rich,” he said. “There seems to be this new philosophy in France that it’s no longer a good thing to be successful.” | “The socialist government seems to have targeted the rich,” he said. “There seems to be this new philosophy in France that it’s no longer a good thing to be successful.” |