Anyone who doubted that Luxe-flation is real, doubt no more. The recently disclosed sale of a 27,000 sf apartment in Monaco reveals a rather stunning price of $20,433 per square foot. Priced at over $551 million, this purchase could make even Ken Griffin look poor with his measly half-priced home at 220 Central Park South that the world has been focused on this past week.

This story reminds me of a person who bought a penthouse in Monaco several years ago for $80 million. The property was surrounded by what has to be one of the most questionable ultra-concrete jungles squeezed into 520 acres, roughly 62% the size of Central Park. Why would someone spend that much for so little? The answer is quite revealing. The tax savings would pay for the entire apartment within 5 years, or less. A perfect example of why some very wealthy super-high-income people choose to live in tax-free areas, even areas they might not wish to live in.

Every so-called "tax-free" area is not tax-free after all. Monaco is not tax free. While it does not fund its government and public services via personal income taxes, it does charge a 20% Value-Added Tax (VAT) on goods and services, receives significant revenue from state-owned enterprises like casinos and hotels, and high corporate taxes on specific businesses. High VAT is great for high earners, but it decimates the poor and middle class. Additionally, when buying an apartment in Monaco, you typically pay between 6% and 9% of the property price in total transaction costs. $33 - $49 million in transaction taxes to purchase this record-shattering Monaco apartment is not exactly tax-free after all. 

PS: Those who claim that the rich are not paying any taxes, need to look closer and do their research! Most (not all) actually pay plenty of taxes!