PARIS: Monaco and the French football authorities have been pushed back to square one over the principality club’s tax-lite status.

The French High Court, the Conseil d’Etat, has ruled against a controversial deal between the French League and AS Monaco which allowed the club to compete in the top division without losing the tax-free benefits.

After complaints from rival clubs, the Conseil d’Etat has overturned a 2014 change in the LFP statutes to allow Monaco to compete without losing its fiscal base in the low-tax principality.

In January 2014, Monaco reached an agreement with the LFP guaranteeing its participation in Ligue 1 while maintaining its official and operational base within its home principality.

The two parties had been at odds over Monaco’s so-called financial advantage for a year, but announced a deal under which the club would pay a “single, lump-sum, voluntary contribution” of €50m ($56m). By making the payment, Monaco said it was “demonstrating its commitment to French football and will be able to continue to pursue its project for the benefit of all stakeholders.”

However, in February 2014, seven clubs, including Ligue 1 champion Paris Saint-Germain and Olympique de Marseille, said that they would take the case to court, arguing that the deal had been “rushed and non-transparent” and did not “respect some basic law principles.”

Rulebook changes

A court statement read: “The court rules irregular and illicit the deal in which the French Professional Football League (LFP) modified its rulebook in January 2014 to allow AS Monaco keep playing in the Ligue 1 and 2 championships without being obliged to base its headquarters on French territory.”

The court said it would allow the two sides four months to resolve the issue so as not to disrupt next season’s competitions, with the ruling taking effect in October. In a brief statement, Monaco said it took note of the ruling and would take time to analyse the court’s decision.

Monaco, which is owned by Russian billionaire Dmitry Rybolovlev, initially failed to overturn legislation requiring the club to base its main offices in France.

In March 2013, the LFP had said that all clubs that play in the country’s football competitions must be registered in France, making them taxable under French law. Monaco, which has long enjoyed a different tax status to its rivals, appealed the decision, although its first attempt to overturn the original order by the league failed in the French courts.

Monaco’s base in the Mediterranean principality allows it to benefit from the favourable tax laws in place there, rather than the far more stringent French laws.