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Jun 20, 2013

Monaco prepare for LFP tax case

Monaco and the French Football League (LFP) will go head-to-head in France's highest administrative court on Thursday afternoon in the first round of their battle over the principality club's privileged financial position.

The two will argue their case at a hearing before the Conseil d'Etat in Paris from 15:00 CET with the club aiming to get an LFP decision to force them to be based in France for fiscal purposes by June 1, 2014 overturned. A preliminary ruling, expected to be made public next week, would give a strong indication as to the definitive judgement, which would be handed down later in the year.

The case went to court following an unsuccessful attempt at mediation on May 3 by the French Football Federation (FFF) president Noel Le Graet, who proposed the club pay €200 million over five or six years in return for having the decision overturned. Monaco president, Russian billionaire Dmitri Rybolovlev, was reported by L'Equipe to have stormed out of the discussions, insulting the FFF boss as he went and with his determination doubled to seek a legal solution.

Should the decision, made by the LFP's Administrative Council on March 21, be enforced, its supporters claim it would level the financial playing field for Ligue 1 clubs. As a consequence of agreements between Monaco and France, the newly-promoted Ligue 2 champions have a significant advantage over their top-flight rivals with a player on an annual salary of €1 million costing Monaco just a third of what their French-based counterparts would have to pay.

Though French players do pay income tax despite playing in the principality, their national insurance contributions are some 20% lower than they would be if they were playing across the border.

Monaco, who could be expelled from French football if they do not comply, are expected to argue that the LFP's decision is based in the area of economics over which it has no jurisdiction, and that it "violates several fundamental principles of French and European law, notably the principle of freedom of movement, the principle of free competition, the principle of open access to sporting competitions and also the Franco-Monegasque fiscal convention of February 18, 1963," as they explained in a statement released on March 28 when they announced they would be taking their case to the courts.

For their part, the LFP will argue that the potential additional costs seem not to have deterred Monaco, who have spent lavishly this summer with an estimated €130 million spent on Radamel Falcao, James Rodriguez and Joao Moutinho alone.

Their case, which has had significant public support from a number of Ligue 1 presidents, notably Marseille's Vincent Labrune and Bordeaux's Jean-Louis Triaud, was also strengthened by the publication of a recent Ministry of Sport study which backed the LFP decision "even if it ends an existing situation, undoubtedly historical but little in line with current law."

Should the Conseil d'Etat rule against Monaco, they could still take their case before the European courts where a ruling in their favour could open the door to clubs in any country being able to establish themselves in the most fiscally advantageous nations of the world.

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