Monaco’s home win may prove taxing
For most of the past year French football has been at loggerheads with the government over the planned 75% tax on players’ wages and with one of its leading clubs, AS Monaco, over their tax-free status.
The French league, the LFP, threatened to expel the club unless it complied with its regulations and moved its headquarters to French jurisdiction by next June. Monaco’s response was to go to the courts. On Friday the long-running drama, some would say farce, produced yet another twist with the announcement that Monaco would be keeping their headquarters in Monte Carlo, and thus retain their tax-free status, but would hand over €50m to the LFP as a “one-off voluntary contribution” to league funds.
“In making this contribution,” the club explained, “AS Monaco FC is demonstrating its attachment to French football and is thus pursuing its project which will be of benefit to all stakeholders.”
Case closed. Sighs of relief. Treble cognacs all-round. Especially for Monaco’s owner Dmitry Rybolovlev, the Russian cardiologist who discovered that potash was more lucrative than heart disease and is currently ranked at number 119 among the world’s billionaires. Moving Monaco out of Monaco would have been a costly business, and there is of course nothing that billionaires prefer to tax-free status.
French journalists are an unsentimental lot and a deal of this sort was no surprise. “Monaco buy fiscal peace,” was the headline in Le Monde. There is not much alternative to Monaco’s “attachment to French football” either for the club or the LFP, although there might still be a few elderly Italians nostalgic for Mussolini’s attempt to grab the Riviera. An added irony is that the club’s headquarters and ground in the Fontvielle district are not only not on French soil, but strictly they are not on any soil at all as the area was sea until 1966 when work began to build a new city quarter.
“From the start it’s been out of the question that Monaco would move their headquarters,” says Regis Juanico, a parliamentary deputy closely involved with sports regulation. “It was a question of principle. To find a compromise the LFP had to change its rules otherwise the two sides would have been involved in a legal battle for years. No one would have gained.”
Juanico also believes there is scope for the LFP to extract more than the promised €50m, which is due to be paid over the next two years. The league is in charge of the distribution of television revenues, and is due to hand over €35-40m to Monaco at the end of the season. Because the club will now be exempt from the 75% tax rate payable on salaries of over €1m a year, its fiscal advantage compared to other French clubs could rise to as much as €50m a season.
That depends of course on whether the new tax rate sticks. After much argument and threats of legal action and strikes, clubs — not players — become liable to pay the new rate from May this year. The French clubs’ association argue that this puts them at a huge tax disadvantage compared to clubs elsewhere in Europe, ie Spain, Italy, England and especially Germany. Some of their calculations are questionable — Italian clubs for example have additional liabilities because of agreements with the players’ union — but we can expect further protests and lobbying of European MPs and Uefa.
For Uefa there is also the awkward question of how this special Monaco tax deal relates to the Financial Fair Play regulations. Monaco are almost certain to be playing European football next season and evidently enjoy a unique advantage compared to other clubs. With Paris Saint-Germain’s sponsorship arrangements also casting a huge shadow over FFP, doubling the club’s income in a single season, it looks as though French clubs may be sowing a minefield for Michel Platini’s attempts to create a more level playing field.
