Do You Know the Way to Monte Carlo?

I was recently watching the ATP Cup with a friend, where the top men in the world of professional tennis battle it out in a team format.

Like many tennis tournaments, the players’ personal stats are shown, including country of birth and residence.

My friend noticed this and she raised an interesting question.

“Why do so many of them have Monte Carlo as their residence?”

As many of you may have already have guessed, it’s for tax reasons.

Monte Carlo is still one of the best tax havens available and many people from the sporting, entertainment and business worlds call it home.

For the tennis tour, Monte Carlo, Bermuda, The Bahamas and Florida are the main residence locations for a number of players.

It allows them to accumulate their earnings in a low or no-tax environment.

So when their playing days are over, they have sufficient capital to generate income in whatever country they may then choose to reside in.

Side note:

I’ve always found it amusing that when Pat Rafter was named Australian of the Year, he was a resident of Bermuda.

Now people may read what I’ve just written and perhaps feel angry that they’re paying income tax in the country they live in and these tennis stars are not.

But you should consider this.

You can move to Monte Carlo too!

Nobody’s stopping you.

But unlike a professional tennis player, you probably have your business or job in one spot and your friends and social life in one spot.

Which means if you want to cancel your Australian residency, it will involve huge upheaval.

A professional tennis player already leads a nomadic life.

They’re never in one spot for too long … their life consists of planes, hotel rooms and the practice court.

So their income comes from many countries and in many forms … endorsements, sponsorships, prize money.

This means that, not surprisingly, each country wants to claim overall taxing rights on the player’s income.

And so the prospect of double-taxation always rears it’s ugly head.

So staying for too long in the one location may work against them.

That’s why one famous tennis player refused to play any lead-up events in a particular country before a Grand-slam event …

… in case he overstayed the maximum number of days he was allowed in the country before that country claimed world-wide taxing rights on his income.

Also, unless they’ve been fortunate enough to snag a lucrative endorsement contract, a player’s peak performance period is usually limited to around 5 years.

Yes, there are exceptions but for the majority they only have a limited window of time to maximise earnings.

And some tennis players have been known to spend their money a little bit … recklessly.

It’s not unheard-of for trust accounts to be set-up by advisors and allowances paid to save the player from him or herself and ensure all their other commitments are met.

As the old saying goes “money goes to where it’s looked after” and Monte Carlo looks after money well.

Whatever moral objections people may have won’t change this.

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Until next time.

Please Note: These articles are provided for education purposes only and should not be construed as specific advice. Always seek professional advice in relation to your personal and business circumstances.