I recently returned from an event of bucket-list ticking importance in my life. It may have “only” been Thursday Free Practice, it may have been the cheap seats (home straight, watching the cars come blasting out of Anthony Noges, the last corner) but my brief and surprisingly affordable experience of the 2018 Monaco Grand Prix is definitely one that will stay with me for a long time.
It might have been a dull race in the end, but the view of the track from Le Rocher, the old town up on the hill where the palace is located, as it winds its way through the Marina is a heart-stopper.
Monaco is a special place with a unique atmosphere. Incredibly, control of the principality has been largely in the hands of just one family; the originally Italian Grimaldis; since 1297. Prince Albert II is the Head of State of the constitutional monarchy that currently governs Monaco, and he is an exceptionally powerful and well-known figure. As well as being one of the world’s richest monarchs, he is also an A-list celebrity; his mother was Grace Kelly, the American film star, and he is often pictured attending events with his wife Charlene Wittstock, who he married in 2011 and with whom he has twins. He even represented Monaco at Bobsleigh over 5 consecutive Winter Olympics!
Monaco is unlike anywhere else in the world; the likes of Singapore, Hong Kong, Dubai, and Abu Dhabi may have usurped Monaco as the last word in terms of riches and glamour, but the principality has an incomparable and historic location on the French Riviera, near Antibes, St Tropez and Cannes to the West, and the border with Italy to the East. It is the second smallest sovereign state in the world, in terms of population, after Vatican City, and yet the most populous; with approximately 38,500 citizens occupying an area of just 2.020 kilometres squared. There are also more millionaires per-person than any other place in earth, ahead of Geneva, Zurich, or Panama; about one third of Monaco’s citizens are millionaires.
Of course, not all of Monaco’s millionaires are true “Monegasque’s”, or local residents born and bred in the principality. Monegasques tend to be humble shopkeepers or local business people, who nevertheless retain a close relationship with Prince Albert; one of their number, who treats them like old friends and neighbours, despite his extravagant wealth.
Prince Albert’s descendants reinvented Monaco in the 19th Century, introducing the Casino at Monte Carlo, which proved to be so wildly popular that the family were able to stop requesting income tax from residents in 1869, a decision that would ultimately turn the Principality in a playground for some of the world’s richest people.
Residents of Monaco today are not obliged to pay income tax, wealth tax, local tax or capital gains tax on their earnings; a situation which makes Monaco an extremely attractive destination for super-rich and wealthy elites, who can protect their assets from their domestic taxman, whilst benefiting from an enviabe location, climate, education system, and plenty of security.
How is Monaco residency obtained? Through investment, of course
Anyone can apply to become a Permanent Resident (the precursor to being a full citizen) simply by investing a total of €1 million euros; at least €500,000 must be deposited in a Monaco based bank, whilst the rest may be put towards the purchase of a property. This helps to explain the astronomical prices that properties in Monaco fetch. Yes, the surroundings are stunning, but what you might purchase in Nice, a 20-minute train-ride from Monaco, for approximately €200,000, is likely to be worth more in the region of €2.5 million in Monaco. And we are not talking luxury, here, we are talking about a cramped 2 bed flats with a small balcony if you are lucky.
That does not deter the super-wealthy, however; prices are likely to remain artificially high so long as Monaco keeps offering its tax breaks, and there is no sign that that will change. Monaco is not a part of the EU, although it uses the Euro as its sole currency and obeys much EU-law. Whilst Monaco’s tax laws have led to confrontations with France – which borders the principality on three sides – France’s military also guarantees Monaco’s protection.
To become a permanent resident in Monaco you will also require a clean criminal record, as well as the ability to prove that you have sufficient financial resources to live as a resident – a formality, surely, for most wannabe residents.
Becoming a Citizen
To graduate from being a resident to a full citizen of Monaco, is more onerous. Foreign nationals who wish to become citizens of Monaco must have lived for at least six months in Monaco for a period of ten years; they must no longer be subject to military conscription in any other country; and crucially, they must renounce their nationality of any other country. Monaco does not do dual-citizenship.
On initial application, if successful, residents are granted a “Monaco Carte de Resident Temporaire”, which must be reapplied for every year for 3 years, before a “Monaco Carte de Resident Ordinaire” is awarded, which only needs to be renewed once every three years. After 10 years, the “Carte Privilege” is finally awarded, conferring full citizenship.
The idea of one day relocating to Monaco, for six months of the year at least, to save on tax is one that most of us will only ever note in passing, without ever having the financial resources to seriously consider it. But for all that it is super-exclusive, guarded (literally and metaphorically), and inaccessible to most, it is still a place worth experiencing and learning about. It is unique, independent, organised, and educated. It is also glamorous, sexy, drenched in sun and stunning to look at. It is, finally, a tax haven, but one that demands respect and integrity from its wannabe residents. The super-rich jet-set crowd may be wild, but in Monaco, it seems, nobody is above the law.
In nearly a millennia of uninterrupted rule, the Grimaldi’s, it is fair to say, have learned a few things about the trappings of wealth, and how to manage them.
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