It has been awhile since Louis Vuitton’s parent company and Gucci’s owner have engaged in a public sparring match. In fact, it has been since the late 1990’s when LVMH and fellow French luxury goods conglomerate Kering were both vying for control over Gucci. But the burning of the Notre-Dame cathedral on Monday appears to have potentially awakened their competitive streak, in addition to, of course, their well-established culture-enriching efforts and charitable ways.
On the heels of an announcement from Kering Chairman François-Henri Pinault that Kering – by way of its investment fund Artemis – would donate 100 million euros ($113 million) to help restore the 13th century medieval Catholic cathedral, which sits just off of the Seine in Paris’ 4th Arrondissement, rival LVMH stepped in to up the ante. The Arnault family and LVMH group announced on Tuesday that they would donate €200 million to the effort.
In addition to helping to “bring this jewel of our heritage back to life as soon as possible,” as Kering’s Pinault put it in a statement on Tuesday, the two luxury powerhouses, along with other donors – such as L’Oreal and the Bettencourt family, French energy company Total, Air France, and consulting firm Capgemini, among others – stand to benefit from what the New York Times calls “a hefty tax write-off” thanks to their charitable pledges in France, which boasts some of the most generous tax breaks for corporate sponsorship in all of Europe.
But just how much they will be able to write off based on their donations depends. A 15-year old French law aimed at “promoting the financing of culture” and coined the “Aillagon Law” after former Minister of Culture, Jean-Jacques Aillagon, enables companies that make charitable donations in support of the cultural sector to receive tax breaks of up to 60 percent of their sponsorship. This is capped at 0.5 percent of a company’s annual turnover.
French broadcast BFM.TV asserts that the 2003 Aillagon Law tax reduction provided by the legislation “can even reach 90 percent when [the donations] concern cultural [products or projects] that are considered to be ‘national treasures’ or that present ‘a major interest for national heritage.” That is precisely what Mr. Aillagon, who now serves as the director general of the Pinault Foundation, thinks should happen here.
On Monday evening, Mr. Aillagon publicly called on the French government to formally classify the cathedral as a “national treasure” to ensure that “donations for its reconstruction benefit from the 90 percent tax reduction” in accordance with that 2003 law.
With both the players and the tax benefits in mind, the motives behind these big-money pledges are certainly not divorced from calculated business endeavors. Still yet, as the New York Times’ Vanessa Friedman writes, these charitable givings are “both altruistic — supplying funds that local governments do not have in the interests of saving a joint inheritance — and self-interested — the companies clearly understand that the more closely they associate with masterpieces of history, the more they bask in their glow.”
Updated (April 17, 2019): According to a statement from the Pinault family released on Wednesday, the company will not be seeking a tax break based on the donation, stating, “as with the Paris Bourse de Commerce Museum, it [will] not be exercising its right to seek a tax benefit under France’s 2003 law.”
The statement further reads, “The donation for Notre Dame will not be the subject of any tax deduction. For the Pinault family, there is no question of French taxpayers having to bear the cost of such a deduction.”
Updated (April 18, 2019): LVMH Chairman Bernard Arnault has commented on to potential tax break following from the Arnault family and the LVMH Group’s 200 million euro donation, “saying he would not benefit from tax breaks and branding the sniping as petty,” per Reuters. Arnault - who is France’s richest man and the 3rd wealthiest individual in the world - told investors at LVMH’s shareholder meeting that “his family holding company is not at the moment eligible for tax breaks on charitable donations … added the luxury goods company had hit its ceiling on tax breaks after those it received in recent years for building the Louis Vuitton Foundation.”