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!.
