Louis Vuitton’s parent company LVMH Moët Hennessy Louis Vuitton is at the center of a tax case stemming from regulators’ “suspicions” that the luxury goods conglomerate “was pretending it carried out treasury operations in Belgium to lower its tax bill.” Bloomberg reported on Wednesday that new information in the ongoing case, which saw tax officials raid the Paris-based offices of LVMH in September 2019, “emerged at a court of appeals hearing on Wednesday in the French capital, where the luxury-goods titan was challenging the raids” and the one million-plus emails that French authorities acquired as a result.
At the center of the case is LVMH Finance Belgique, the conglomerate’s 12-year old, Brussels-located subsidiary, which is tasked with providing financial services, such as managing LVMH’s short-term treasury notes program. According to French tax officials, the workings of the Belgian offshoot very well may have been conducted in France, but have been logged in the company’s books as being performed by LVMH Finance Belgique in Brussels in order to benefit from lower tax rates.
In a hearing before the Paris Court of Appeal on Wednesday, counsel for LVMH – which owns more than 70 different luxury brands, from fashion houses and beauty brands to wine and spirits companies, and generated $59.1 billion in revenue in 2019, alone – argued that the raid and seizure of internal correspondences ran afoul of the law. To be exact, Jerome Turot, one of the numerous lawyers who appeared in court this week on behalf of LVMH, argued that the documentation that tax authorities presented to the court in order to get a warrant to raid the LVMH headquarters violated French tax-secrecy and privacy rules, particularly in connection “data concerning the head of [LVMH’s] Belgian unit.”
Delphine Michot, another lawyer representing LVMH, argued that in addition to LVMH – which is the largest luxury goods group in the world – being “one of the largest taxpayers in France,” its Belgian finance arm is hardly a shell company aimed at enabling the luxury giant to rig the tax system. With that in mind, she told the court that the Belgian unit is not just an address for LVMH to reference for tax purposes, and instead, “occupies half a floor in a big tower in Brussels” and employs at least six full-time staffers, Bloomberg reported.
Judge Elisabeth Ienne-Berthelot of the Paris Court of Appeal informed the parties that a ruling on the legality of the raid can be expected in early September.
As Bloomberg notes, this is hardly the first time that LVMH has been taken to task over its dealings in Belgium. The group’s chairman Bernard Arnault sought Belgian citizenship in 2012, right around the time that then-president François Hollande announced a plan to impose a 75 percent income tax rate on the nation’s highest earners. Arnault, who currently holds the title of the second richest person in the world (behind Amazon founder Jeff Bezos), insisted that the move was not aimed at escaping French taxes (including speculation that such citizenship would have allowed his children to avoid paying inheritance taxes in France). He ultimately withdrew the application, but not without facing widespread backlash, including from Hollande.
At the same time, French daily newspaper Libération printed a front-page banner headline dedicated to Arnault’s alleged tax dodge, which read, “Get lost, you rich jerk.”
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