Monaco is the second smallest country in the world after Vatican City.
It can be called a city state, meaning the entire country only really has one main city.
You might also call it a microstate.
One of the largest and well-known of these micro states is Singapore, which has a land
mass of 714 km2 (276 sq. miles) and a population of around 5.8 million.
But Monaco really is micro.
It has a land mass of 2.02 km2 (0.78 sq. miles) and a population of just 38,900, people.
But why is this small place on France’s Mediterranean coastline so wealthy?
That’ what we’ll find out today, in this episode of the Infographics Show, What Makes
Monaco So Rich?
According to World Atlas, Monaco has the 181st largest economy in the world.
Its GDP is just over six billion U.S. dollars.
That hardly makes it rich, eh?
The same website tells us the GDP per capita, though, is $163,351.
Or you can look at it this way.
According to a report published by New World Wealth in 2017, Monaco’s citizens altogether
had more private wealth per capita than any other citizens from any given country.
The report said Monaco was way ahead of any other country, with the average private wealth
of its citizens being $1.7 million.
Liechtenstein and Luxembourg were second and third respectively, but way behind Monaco.
The USA, with all its billionaires and millionaires, was eighth in the top ten list, with the average
private wealth being just over $158,000.
Canada and Hong Kong followed.
This is the average, though, not all private wealth added together.
In that case, the USA is top of the world, with China, Japan, UK and Germany following.
Understandably, with so few people, Monaco would never get on that list.
But, where is all the cash coming from, for the average person to have $1.7 million.
Well, we need to explain a bit of history first.
Monaco became a country when Emperor Henry VI got a grant for the land in 1191.
We are going to cut a lot out, but the rock of Monaco has since been ruled by the house
of Grimaldi.
Princes of Monaco became vassals (kind of subordinates) to the Kings of France.
Fast forward through hundreds of years of tangles with France and a treaty was signed
in 2002 which said even if there are no Grimaldi dynasty heirs to rule the country it will
still retain its independence.
It is, however, protected by Mother France.
That’s Monaco in a very small nutshell.
It’s important to know, because it’s said the Grimaldi family at times didn’t quite
have the cash to maintain their lavish lifestyles.
In 1863 Princess Caroline, a very clever woman with an impressive business mind, decided
to open a casino in Monaco to save the Grimaldi family from going bankrupt- creating the famous
“Monte Carlo Casino”.
But this was all part of luring the rich and famous and making some dough from tourism.
It obviously worked, as the rich and famous flock to Monaco these days.
To understand why Monaco is so rich we must look at something that happened in 1869: the
removal of the income tax.
This, according to CNN, has attracted rich folks from over 100 countries.
CNN said one in three people that live in Monaco are millionaires.
A lot of famous people are criticized for living there and not paying their dues to
their own country.
These include a few Formula One drivers who have amassed millions.
Ace driver Lewis Hamilton is one of them, but he also has properties in New York and
Colorado.
Apparently, though, his main home is his 13 million-dollar apartment in Monte Carlo.
Yep, income tax can be such a pain.
Many people have very obscure ways of avoiding taxes, as we saw in the Panama Papers, but
tax avoidance by moving to Monaco isn’t that difficult.
There are many places in the world you can move to avoid high taxes, and these people
are often to referred to as “tax-exiles.”
The Guardian even writes that some rich British people would live in Monaco but commute to
London and then return to their fancy house in Monaco after.
Effectively, this allowed them to work in the UK but not pay income taxes as they could
say they lived in Monaco.
Investopedia explained more about this.
“To be considered a resident, a person must live in the principality for six months and
one day out of the year,” said the website.
“Considering the strategic location of Monaco, which is easily accessible by airplane, boat
or train, it is very common for residents of the principality to work and even live
in other countries in Europe.”
The British press tells us thousands of the British elite avoid taxes this way, which
includes human rights activist Bono from U2.
This has prompted other activists to turn up at U2 concerts holding banners, saying
“U pay tax 2?”
But many pop stars became tax exiles in various countries, including members of The Beatles,
the Rolling Stones, Cat Stevens and David Bowie.
Some people defend them, saying they get taxed so much it just makes good business sense.
If you want to join the wealthy elite and live in Monaco, you’ll have to apply for
legal residence, have no criminal record, and as one lawyer explained on a forum, “If
you get into trouble in Monaco, you can and will be summarily kicked out without any legal
recourse.”
One website said there are three ways to get this residency.
Get offered a job there, start a business there and have the cash to do it, or just
show that you are super-wealthy.
So, why is it rich?
Not only because rich people live there to save money but because it also attracts the
wealthiest people in the world as visitors.
They spend a lot of money there.
It’s said you’ll pay at least $10,000 a sq. foot for an apartment.
We wanted to check that out, so we went online apartment hunting in Monte Carlo.
Don’t even think you can get anything other than something that resembles a broom cupboard
for under $1 million.
We found a decent looking place, 2 rooms and 63 sq.m, and it was $4.4 million.
The ad said it even had air conditioning!
We can assure you, the place was nothing special.
Now you can understand why Monaco is so wealthy.
The money has just followed the money.
Have you been to Monaco?
Would you go there if you were rich?
Let us know in the comments.
Also, be sure to check out our other video called Illegal Things That YOU Do Every Day!
Thanks for watching, and, as always, don’t forget to like, share, and subscribe.
See you next time!