Monaco Might Lose Its Status of Personal Income Tax Haven

That Monaco is crowded with celebrities is not news. Since 1869, when the income tax policy became favorable, Monaco attracted very many people with high net income, such as film stars, sporting stars etc. who became residents of the Principality in order to benefit from exemption from income tax.

Take, for instance, Roger Moore, Shirley Bassey, Ringo Starr, Karen Mulder, Eva Herzigova, the race drivers Jacques Villeneuve, David Coulthard, Jenson Button.

But the celebrity count is much more than the number of business people who appreciate national tax facilities: the retail tycoon Philip Green and the Barclay brothers are Monegasque residents.

Is a resident of Monaco means that you have proof of a place to live and are rich enough to provide very high quality of life. And I mean really rich, as a place to live in two buildings in a crowded square, it is rented or purchased, are very high.

Keeping the place of residence within the meaning of proving you live in Monaco at least 6 months and one day a year. If you're rich, then a resident of Monaco has the advantage that not only enjoy the sunny, pleasant climate, you can live at the same time in another country. Principality is very close to major airports and is easily accessible by sea, by car or train. Thus, a Monaco resident and working in another country is not only possible but easy, especially when it comes to the UK civil law in Britain allows a maximum stay of 90 days (not counting the day of departure and arrival!) For non-residents. Many business people in the United Kingdom, Monaco resident and working in the UK, without exceeding 90 days, so they are subject to Lawas Monaco tax.

Having attracted so many rich resulted in a conflict of interests: many countries disapprove of this taxation policy, looking to avoid taxes in their field nationally. And not entirely wrongly! In fact, Monaco is a "tax fraud", a bit of attracting capital from high tax countries.

Looking at this issue from the perspective of the Principality, seems to me, just trying to grow and succeed with limited funds and resources in the country so small a. Monaco developed from one of the poorest countries in the world (1860) is a country with one of the world's highest per capita income (around EUR22, 000). And this is possible thanks to the strategic management of the poor country. This is after the territory was drastically reduced that this personal income tax policy has emerged. Attracting foreign capital become one of the key development objectives. Thus, the Casino became grand and famous and emphasis was on tourism, there is a level of luxury.

After the individual taxation regulations, in 1963 the Principality came with another financial artifice: no tax for local company profits or dividends. Thus, the aim was to strengthen the local business boom. This provision, together with the almost hermetically data privacy did nothing else than to increase even more foreign investment in Monaco.

So, in terms of major economic powers, Monaco should be punished, and deserves every country daring to offer a better alternative to the tax disadvantage their economies with high taxes. OECD has a project on "harmful tax practices", which provides a range of penalty measures for non-cooperating jurisdictions.

Referring to money laundering and international terrorism tracking, many OECD governments promote free exchange of information policy, whose main purpose limiting the tax competition, beyond the intention to limit tax evasion and the fight against serious crime.

Estimated negative results of OECD policy:

* Prevention of tax competition leads to standardization in the amount of fees to be determined by some governments. Without being able to choose the better alternative, there is no reason for governments to reduce taxes and make tax systems more efficient.
* This policy will change the current status of emigrants that pay taxes in their new country and to encourage the assumption that the state always has the right to benefit from its former national labor. This appears to breach fundamental human rights.