Billionaire Bernard Arnault's LVMH amasses euro 4 bn in Belgium

Companies linked to French billionaire Bernard Arnault’s LVMH Moet Hennessy Louis Vuitton have amassed euro 4 billion ($5.2 billion) in assets in Belgium, where he recently applied for citizenship.

Belgian central bank records show that 12 companies and a private foundation, all connected to LVMH and based in Brussels, have more than tripled their assets since 2008.

Olivier Labesse, an LVMH spokesman, said the companies are investment vehicles for LVMH, which has annual revenue of $26 billion. The Paris-based company has made Belgium its “operational center of finance” in recent years to take advantage of more favourable tax treatment there, he said. The shifting of assets to Belgium “has nothing to do” with Arnault’s personal tax situation, Labesse said.

 

BONJOUR BELGIUM

TIMELINE

February: French President Francois Hollande announces plans for a 75% tax on revenue exceeding 1 million euros a year, to cut France's public deficit 

September 7: Hollande confirms would press ahead with the new tax 

September 8: Bernard Arnault, France's richest man and chief executive of luxury group LVMH, says had applied for Belgian nationality; says move not to cut tax bill but to invest in Belgium; vows to pay tax in France

September 16: French Finance Minister Pierre Moscovici says 75% tax to stay for two years

MOGHUL’s MOVES 

• Arnault had emigrated to the United States during the last Socialist presidency in France, in 1981
• Belgian newspapers have cited the mayor of the Brussels suburb of Uccle as saying Arnault told him in late 2011 that he wanted to move to Belgium because he was unhappy with French tax policies
• LVMH spokesperson says Belgium made “operational centre of finance” in recent years to take advantage of tax treatment 
• Belgian central bank records show 12 entities linked to LVMH and based in Brussels have more than tripled their assets since 2008
• Arnault would only need principal residency in Belgium, and not citizenship, for tax advantage

TAX HAVEN BELGIUM

• Income and inheritance taxes lower than in France
• Does not impose a tax on personal wealth

 

Arnault, 63, the chief executive officer of LVMH and France’s richest man — with a net worth of $25.7 billion, according to Bloomberg’s Billionaires Index — sparked an uproar in France this month when he said he was seeking Belgian citizenship, just as President Francois Hollande plans to impose a 75 per cent tax on income of over euro1 million.

Belgian income and inheritance taxes are lower than in France, and unlike France, Belgium does not impose a tax on personal wealth. The LVMH chief has said he will retain his French citizenship and will continue to pay French taxes.

The 12 Belgian investment companies report assets ranging from less than euro100,000 to more than euro2.6 billion in their most recent central bank filings. Their total holdings are just over euro 4 billion, up from 1.3 billion in 2008. They employ seven people, according to the filings.

In addition to the companies, Belgian records show that in 2008 Arnault created a private foundation called Protectinvest, whose charter says it is to “protect the financial interests and wealth” of Arnault’s heirs.

The foundation now has only a few thousands euros in assets; its charter says it would be used after his death to protect his heirs’ interests in Pilinvest, one of the 12 investment companies.

Pilinvest’s most recent central bank filing, in 2009, reported euro 242 million in assets. LVMH spokesman Labesse declined to answer questions about the foundation, citing a company policy against commenting on Arnault’s private finances.

The LVMH investment companies, first disclosed last week by the Workers Party of Belgium, are stirring controversy in Belgium because they pay very little tax.

They reported euro 630.4 million in profits since 2009, while using deductions to reduce their tax bill to only euro 24.2 million , says David Pestieau, head of the Workers Party research department, who has analysed the companies’ annual reports. He calls the companies “nothing more than a post office box” that allows LVMH to evade French taxes.

A Belgian television crew on September 13 visited a modest Brussels office building where most of the companies are housed. The companies were listed on a sign outside a locked door; when a reporter knocked, a voice inside replied, “No one is here.”

Belgian newspapers cited the mayor of the Brussels suburb of Uccle as saying last week that Arnault told him in late 2011 that he wanted to move to Belgium because he was unhappy with French tax policies.

Arnault has said that his “personal action” is not aimed at sending a political message or escaping Hollande’s so-called millionaire tax.

French Finance Minister Pierre Moscovici said yesterday that the 75 per cent tax will remain in place for two years.

“We aren’t watering down the measure,” he said in an interview on RTL radio. “It’s a strong, patriotic measure. Those that got very rich over the past period can help in a patriotic way to turn around the country.”

In order to benefit from lower Belgian tax rates, Arnault wouldn’t need to be a Belgian citizen — although he would be required to have his principal residence there.

Arnault has said he wanted a Belgian passport because he is planning to invest there. Local investment authorities, however, said he would gain no advantage by having citizenship.