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Jun 5, 2013

France wants Monaco tax loophole shut

The French Sports Ministry has given its backing to the decision that would end Monaco's privileged financial status in French football.

• Blog: Monaco making a splash

The French Football League's (LFP) administrative council ruled in March that all clubs participating in its competitions must be based in France for fiscal reasons by the end of the 2013-14 season or potentially face exclusion.

The decision only affects Monaco which - as a consequence of government-level agreements between the principality and France - benefits from foreign players paying no income tax, allowing them to offer bigger salaries, while the club's own contributions as an employer are significantly less than those of their French counterparts.

Asked by the French Football Federation (FFF) to review the decision, the Sports Ministry ruled "the modification introduced by the LFP's Administrative Council is in no way contradictory to the statutes of the FFF and is within their rights, even if it puts an end to a situation undoubtedly historical but little in keeping with current law."

The recommendation, however, makes little difference to the situation, which has been referred to France's highest court on administrative matters, the Conseil d'Etat. An initial ruling on the matter is expected on June 20 with a final judgement being handed down some months later.

LFP president Frederic Thiriez on Tuesday sent a letter to club presidents reminding them of the scale of the difference between Monaco, who have already spent an estimated €134 million on new players since gaining promotion to Ligue 1 last season, and their top-flight rivals.

"In the hypothesis that next season Monaco will have an after-tax wage bill comparable to that of Marseille or Lyon, their social and fiscal advantage will be around €50 million a year," wrote Thiriez. "It would go to €65 million if the 75% rate of tax on high revenues comes in."

The 60-year-old pointed out the newly-crowned Ligue 2 champions could have eased the tension by strengthening their squad with purchases from French counterparts. However, of Monaco's five summer recruits, only 21-year-old Nicolas Isimat-Mirin, brought in from Valenciennes, has been bought from a French club.

"The situation is not new and we debated it at length at the league in 2003-04," he added. "At that time, ASM had given a commitment to sign a maximum number of French players. But 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% towards foreigners."

Thiriez added the mooted suggestion of FFF president Noel Le Graet, 71, that Monaco pay €200 million to resolve the situation had not been at his insistence. "Neither the LFP, nor the UCPF [the Union of Professional Football Clubs] have asked Monaco for money to be able to break the law," he said. "Anyway, it's now up to the Conseil d'Etat to decide and the parties to respect the decision."

Meanwhile, Monaco new boy James Rodriguez has declared his bold ambition to win titles with the principality club following his estimated €45 million switch from Porto.

Though he is currently on international duty with Colombia ahead of their upcoming World Cup qualifiers against Argentina and Peru, the 21-year-old, has already set his sights on swelling his new team's trophy cabinet.

"When you arrive at a new club, the objective is to win titles. I hope that we're going to win trophies," he told the media in Argentina where he will feature for his country in Friday's qualifier.

Rodriguez will be joined by former Porto team-mate Joao Moutinho, Ricardo Carvalho, Isimat-Mirin, and compatriot Radamel Falcao at the Stade Louis II next season, and is particularly looking forward to playing alongside the latter, an estimated €60 million purchase from Atletico Madrid.

"It's always good to play with a friend," he said. "I hope we're going to achieve some great things with Monaco."

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