AS Monaco Files Suit Against FFF and LFP for Forced Move to France

French Ligue 2 club AS Monaco FC confirmed last Friday that it has filed two suits with the French Council of State, on the grounds that the French Football Federation (FFF) and the French Football League (LFP) violated “several fundamental principles of French and European law”, according to an article released from Soccerex on Monday, May 20th.

BOS_AS Monaco

image from asm-fc.com

Monaco is a sovereign principality located in the southeastern corner of France on the coast of the Mediterranean Sea, and is governed by a constitutional monarchy under a head of state, Prince Albert II (Wikipedia). Under Monaco’s bylaws, foreign players are exempt from paying income taxes, an obvious advantage to playing for the club. Players in the rest of the LFP do not share in this same exemption, as French law does require the payment of income taxes, and in fact there are proposals in place that would require earners of 1 million Euros or more to pay 75% in income taxes, according to Soccerex.

Earlier this year, in March 2013, the LFP ruled that all of its participant clubs should be subject to the same set of financial rules, which includes the payment of income taxes. The LFP gave Monaco the option to either move it’s headquarters to France, or pay a lump sum of 200 million Euros by June 1, 2014. If the club chooses not to comply it faces exclusion from all LFP competition play.

The following is an excerpt from the Soccerex article that explains what the legal actions the club has filed with the French Council of State mean:

The club said a suit of annulment has been filed with the objective of annulling March’s decision by the LFP. This will consider the substance of the case and a judgement is expected to be given in several months. A second suit – a request for suspension – aims to achieve an immediate suspension of the decision for such time as the annulment suit is being considered.

Essentially, AS Monaco has asked that the LFP ruling made in March be stricken from the record permanently, and that the case weighing the same ruling be suspended while the annulment suit is given consideration. This decision will have very significant implications for the club moving forward no matter the outcome, because it stands to move into the French top flight Ligue 1 next season, having just won the second tier Ligue 2 title last Friday, May 17th.

One of the major draws for Monaco to attract top talent to the club to bolster its roster to compete in Ligue 1 next season with the bigger clubs would be its ability to say that any potential candidates would be exempt from paying any income taxes – not something anyone else in the league could offer. If the LFP’s ruling is upheld, either the club is out a lot of money and wouldn’t be able to afford the level of talent it would want or need to compete – at least for a while – or it would move its headquarters into France and would lose its competitive advantage for attracting new players.

Monaco released a statement on Friday, saying:

The club intends to show that the decision of the LPF imposed on AS Monaco, forcing it to move its headquarters to France, violates several fundamental principles of French and European law, notably the principle of free movement, free competition, free access to sporting competitions, and also the Franco-Monégasque tax convention signed on February 18, 1963.

The principle of free movement was established under the EU in 1993, with the intention to abolish all custom tariffs on international trade, making it much easier for EU countries to do business and it promoted intra-community trade, which accounts for a good portion of the Member States’ imports and exports. The principle of free competition is fairly similar to the anti-trust laws in the United States, and essentially is designed to prevent monopolies and market dominance, and to promote a competitive marketplace for businesses in all sectors. The Franco-Monégasque tax convention the club referred to is a tax code signed by the two countries in 1963 stating that there is no personal income tax in Monaco, and according to ASM FC, the LFP ruling from March is in violation of said agreement.

Monaco have seen a recent surge of success after the takeover of Russian billionaire Dmitry Rybolovlev as club owner in December 2011. If the LFP’s ruling is upheld and the club can’t find a new way of attracting top talent, that trend may soon be stifled, and its hopes of competing for the Ligue 1 title prolonged.

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