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May 6, 2013

Monaco tax row escalates

The row between Monaco and the French football authorities over attempts to end the principality club's privileged financial position has escalated with both parties claiming the other said a €200 million payment would resolve the prickly situation.

A 19th-century agreement between France and Monaco means foreign players and officials at the Ligue 2 promotion-chasers do not pay income tax, while the club also pays less to employ them and French nationals.

The French Football League's (LFP) Administrative Council in March ordered all clubs participating in their competitions to be based in France come the end of the 2013-14 season or face exclusion, a move Monaco claim is specifically aimed at them as it would mean they would be put on the same fiscal footing as other clubs in Ligues 1 and 2.

Following a meeting between French FA (FFF) president Noel Le Graet and Monaco's owner, the Russian billionaire Dmitri Rybolovlev, on Friday, the club sent out a press release on Sunday claiming the FFF, to whom Monaco had appealed, had demanded €200 million as a compensation payment to fellow clubs to resolve the matter. The FFF responded later the same day insisting that "it was ASM who had proposed a payment of €200 million in a timeframe and a manner yet to be determined".

Le Graet is reported as saying in L'Equipe: "It was going very well. The Monaco officials seem to have changed their minds. It seems Dmitri Rybolovlev is saying: 'I bought the club like that. There are agreements between Monaco and France. The rules of the league don't concern me'."

He added that the FFF was merely playing the role of peacemaker.

"The federation wants to sort things out. It seems difficult to imagine not accepting Monaco in our league, but it also seems necessary, from our point of view and following discussions with Monaco, that the club, given its advantages, eases the situation of the other clubs. We had laid out a number of criteria. I repeat: our discussions had progressed well. We wanted an amicable agreement."

Rybolovlev's vast resources, estimated at over $9 billion last year, and the tax laws regarding foreigners - which mean a player on €150,000 a month costs Monaco €43,000 less per month than their French-based counterparts - give them a considerable advantage over their rivals. The situation would be further exacerbated should the French government force through its proposed income tax rate of 75% on all revenue over €1 million.

"Some presidents are taking a hard line as they're threatening to not go and play at Monaco," Le Graet warned. "History shows Monaco have always played in the French league. We find ourselves in an exceptional situation. It's up to Monaco to make the situation easier for the other clubs. The federal line is clear: smooth the rough edges, find an amicable agreement."

Though Monaco failed to clinch promotion back to Ligue 1 after a two-year absence as they slipped to a home defeat to Caen on Saturday, it appears that it is only a matter of time before Claudio Ranieri's men return to the top flight given they have an eight-point cushion over those just outside the promotion places with three games remaining.

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