Football-Money-Politics: The story of AS Monaco

AS Monaco New Crest 2013

Some of you following the happenings in European football must know about AS Monaco. This little principality football club, based out of the France-adjacent Monaco, is owned by Russian billionaire Dmitry Rybololev. Why this club is in the news is because AS Monaco have made full use of the tax-free status Monaco enjoys by splashing out on football’s brightest talents.

Mr. Rybololev took over Monaco after approval from Prince Albert of Monaco. The club was in a bad moment when he came to power at the club. However, the installation of Claudio Ranieri as the new Head Coach, and an influx of players from abroad saw the club reach back to the heights of Ligue 1, France’s premier football competition. Before the start of this season, Rybololev spent a staggering 130 million Euros on 3 players- Radamel Falcao, James Rodriguez, and Joao Moutinho. This was as far as FFF’s tolerance could stretch, causing them to take legal action against AS Monaco. The war that ensued has taken place between the French Football Association(FFF) and AS Monaco.

Falcao: Signed for 60 million euros.
Falcao: Signed for 60 million euros.

FFF’s Argument

FFF argues that AS Monaco is exploiting its tax-free status. In France, all clubs except Paris-Saint-Germain are struggling to balance the books to book their slot in continental competitions like the Champions League, and the Europa League. Selling players is becoming a routine affair. To maintain equality amongst the division, and make the French League as competitive as it can be, Monaco should be taxed like the other clubs are. In France, the tax rate is a staggering 75% for footballers. Monaco, almost acting as a guest team, does not have to pay taxes for non-french footballers residing in Monaco giving them a free-reign to hire the best players and pay high tax-free salaries. AS Monaco players do not have to pay income tax on their salary, which means paying a player a net amount of €100,000 per week costs the club significantly less than its taxpaying rivals.

AS Monaco’s Defense

Under a long standing agreement between Monaco and France, whilst French nationals living in Monaco pay French income tax, Monaco levies no tax on individuals, wherever they are resident. Since France has no authority under the agreement to charge French tax on Monegasque residents, non-French individuals who move to Monaco will not be subject to any income tax on their Monaco earnings. Hence, AS Monaco is quick to point out to the European Court of Justice that any tax levied on them violates the agreement with France.

James Rodriguez and Moutinho: Signed for a combined fee of 70 million euros.
James Rodriguez and Moutinho: Signed for a combined fee of 70 million euros.

Conclusion

Both sides of the story seem right in their own ways. But in terms of football, the FFF’s argument makes a lot more sense. If the tax is levied as planned on AS Monaco, the club will have to pay a staggering 200 million Euros by the end of this season as a backlog of payments from before. for now however, the decision is yet to be taken.

The question is, which side do you think is correct? Do leave your comments below.

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