MONACO, France—At less than one square mile, Monaco manages to pack an enormous amount of wealth into one tiny principality.
Located on the French Riviera, Monaco is widely known as a rich person’s paradise—it boasts no income tax, no capital gains tax, and no inheritance tax and stores trillions of dollars in secret bank accounts.
Known as a country with high regard for privacy and security, the requirements for storing your cash in Monaco are relatively minimal: no criminal record, you must be a member of the European Union and perhaps most importantly, you must have enough money. Just how much is enough? To open a bank account in Monaco, you need a minimum deposit of nearly $400,000, CBS News’ Holly Williams said in a report that aired Friday on “CBS This Morning.”
According to Jean-Humbert Croci, an tax advisor in Monaco who works with wealthy tax exiles, it is a safe place to openly enjoy wealth. “They like the Monaco lifestyle,” he said, referring to his clients.
But many in the international community take issue with this so-called safe tax haven, and foreign governments have complained for years that Monaco is taking advantage of resources that should remain in the home countries.
Monaco spent five years on an OECD international list of uncooperative tax havens, but was removed from the list in 2009, after signing bilateral agreements on tax information exchange with other countries.
According to a 2010 report, written by economist and lawyer, James S. Henry, $21 trillion of unreported financial wealth was hidden in Monaco in 2010, an amount equivalent to the combined economies of the U.S. and Japan. The report adds that if just 1 percent of wealth kept in Monaco were taxed, it would generate more than $210 billion in revenue.
For his part, Henry says Monaco essentially facilitates a system of “social apartheid ... where the rich can live in Monaco tax free and everyone else is basically out of work.”
The global financial crisis put increased pressure on Monaco to alter its financial system in the name of greater transparency, but Prince Albert II, Monaco’s head of state, told CBS’ Holly Williams, “we’ve been able to accommodate every inquiry and every issue that was brought to the forefront ... so I think it’s very unfair to say that Monaco is not compliant.”
According to Williams’ report, others counter Prince Albert’s stance, and say the recent measures Monaco has taken are merely “window dressing” and that the wealthy will continue to flock to Monaco for a life of sun and glamour ... and of course, tax-free financial security.