Like old King Farouk, Egyptian tycoon Mohamed Al-Fayed has finally decided to set up residence in Monaco - joining the likes of Formula One racing driver David Coulthard and actor Roger Moore in the Riviera tax haven.

After 35 years in the UK, the owner of Harrods and the Ritz Hotel in Paris left Britain 18 months ago for the shores of Lake Geneva, angry over the "grossly unfair treatment" dealt to him by the British establishment and tax authorities.

But Switzerland has not proved so benign, and a recent change in the local law excluding foreigners from a loophole to avoid inheritance taxes has prompted his move to Monaco.

Apart from American and French residents who have to pay their countries' income taxes, the tiny principality's other foreign residents still enjoy no income or inheritance taxes. The problem is Monaco is now keen to spruce up its old Somerset Maugham image as a "sunny place for shady people".

French residents will also soon have to pay France's controversial special levy on large fortunes, as well as their normal income taxes. Worse, Monaco, along with Lichtenstein and Andorra, is considering signing up to the OECD's transparency and exchange of information standards already adopted by 33 other offshore tax havens.

This would then leave only two offshore centres on the OECD's "black list": Liberia and the Marshall Islands. Not the sort of places, one suspects, Mr Al-Fayed would choose to take up residence.