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SBD Global/January 28, 2014/International Football

AS Monaco's Settlement With French Football League Means Club Can Keep Tax Break

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The lack of income tax in Monaco "has worked well for the Principality," according to Gabriele Marcotti of the WALL STREET JOURNAL. The tax break "has had a pleasant knock-on effect" for the local football team, AS Monaco. It can sign players who qualify for the "tax free" status and effectively "pay them in net terms, saving itself tens of millions of dollars a year in the process." Last year, the French Football League (LFP) "sought to end this anomaly by passing regulations whereby every club needed to have its corporate headquarters on French soil." By forcing Monaco to base itself in France, "its employees would be subject to French taxation." Predictable threats of legal action from both sides followed until, on Friday, "a settlement was announced." Monaco would make a one-time payment of $68.3M and the LFP "would drop all efforts to bring it into the French fiscal fold." It "was the equivalent of paying a lump sum in exchange for never again being bothered." On the surface, "it looks as if Monaco made out like a bandit on this one." The one-off payment "is hefty," but a quick calculation of the Monaco players eligible for tax-free status and their salaries suggests that "the club will make that money back in savings in less than three seasons." The argument that the LFP actually got a good deal "is somewhat flimsy, but includes the following factors." First off, Monaco "is paying that money to the LFP and not to the French tax authorities." And, ultimately, "a strong, wealthy Monaco helps pump money into the French game" (WSJ, 1/26).
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