The French Riviera principality has long been a tax haven for athletes, celebrities and the super-rich because it does not charge residents income tax.
Via Justin BirnbaumForbes staff
WOMEN
ovak Djokovic may be the most famous Serbian athlete on the planet, but the tiny principality of Monaco he calls home. Indeed, 5 of the ATP’s top 10 ranked players all claim Monaco as their primary residence and it’s easy to see why.
Located on the French Riviera, this 500-acre state enjoys more than 300 days of sunshine a year, just a short flight from several European capitals and has top training facilities, including the Mouratoglou Tennis Academy. famous, less than a kilometer away. an hour away by car.
But there’s another advantage for star athletes and the super-rich. Monaco is a tax haven, with no personal income, capital gains or investment taxes. As for the highest-earning players in tennis—such as Djokovic, ranked No. 1 above Forbes’ list of the highest paid tennis players in the world with an estimated income of $38.4 million over the past 12 months—the savings could run into the millions.
In addition to the 23-time Grand Slam champion, Monaco is also the main residence of Russian Daniil Medvedev (number 3 in the world), Denmark’s Holger Rune (No 5), Italy’s Janik Sinner (No 6) and Stefanos Greek Tsitsipas. (Number 7). “I am from Denmark,” said Rune Forbes, “and it’s a great country but there aren’t many tennis players. So for me, the facilities and the players are here [in Monaco] practicing together is really important because in Denmark I couldn’t have this kind of experience.”
The principality is also home to some of Formula 1’s best drivers, including Max Verstappen, Lando Norris and Charles Leclerc—and that’s not just because they want to practice for Monaco’s famous Grand Prix. Many billionaires, both in and out of the sports world, also live there, including Everton FC owner Farhad Moshiri (with an estimated net worth of $3.1 billion), Belgian sugar heir Eric Wittouck ($8 billion) and real estate and transportation mogul Israel Eyal. Ofer (19.4 billion USD).
Swedish life: Bjorn Borg on the balcony of his house in Monaco in 1975.
STF/AFP via Getty Images
Of course, Djokovic is not the first athlete to enjoy these financial benefits. Swedish tennis legend Björn Borg, who won five consecutive Wimbledon titles and six other Grand Slam titles at the French Open, has lived for more than a decade as a resident of Monte Carlo, since the late 1970s. After retiring at the age of 26, Borg eventually ran into financial trouble with his fashion business, had to move back to Stockholm, and nearly filed for personal bankruptcy after The Swedish government requested a $40,000 tax refund.
“It’s an open secret,” the doctor said. Andreas Bosse, international legal consultant based in Monaco. “They come here because of the nice weather, but everyone knows Monaco has significant tax advantages.”
Acquiring accommodation is not particularly difficult. Requirements include renting or buying an apartment, opening and funding a bank account with at least 500,000 Euros and signing a utility contract, such as electricity. Potential candidates must also have a clean criminal record and attend an interview with a police recommendation from the Monaco Security Department. European and Swiss citizens can apply for residency directly in Monaco, and Bosse estimates that the process takes about two months. On the other hand, Americans must first apply for a long-term visa in France.
That’s not the only downside for US citizens. Americans face immigration taxes wherever they reside around the globe. “If they don’t have taxes [in Monaco]you will continue to pay taxes on your global income as if you were living in Manhattan,” said Jerry August, co-chair of Fox Rothschild’s international tax and wealth planning practice group.
In a way, the French are also out of luck at the home of the famous Casino de Monte-Carlo. Due to a long-standing agreement, French citizens living in Monaco are still subject to their country’s income tax. In total, Monaco has 35 signed agreements, of which 33 are currently being implemented, around the exchange of tax information with countries around the world, including the US and France.
However, Bosse noted that in certain cases, Monaco’s tax benefits “are not as great as people think.” Athletes competing around the world are still required to source income or pay taxes in the jurisdictions where they are competing. For example, if Djokovic wins the 24th major at the 2023 US Open, where singles champions will win $3 million in prize money, he will not owe the Monégasque government. But the IRS will not be so forgiving.
Likewise, taxes may apply to sponsorship and social media income. Some countries may argue that appearances, digital postings, and online sales within their borders make events taxable and that the athletes’ respective incomes are earned during these events. That case must comply with their laws. However, unlike bonuses, it is more difficult to determine.
“The basic principle of both U.S. tax and international tax is that a jurisdiction has the right to always tax your labor if your labor is performed in that country,” August explains. And that’s a racquet that no player wants to touch.
MORE FROM FORBES
MORE FROM FORBESThe highest paid tennis players in the world in 2023Via Brett KnightMORE FROM FORBESTennis’ Big 3 and Serena won 88 Majors and made $2.5 billion. A new generation is ready for their blow.Via Knight BrettMORE FROM FORBESMeet the next generation of American tennis starsVia Matt CraigMORE FROM FORBESTunisian tennis star Ons Jabeur has a strong game plan to win on the courtVia Justin Birnbaum
Leave a Reply