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France

France's richest man sends tax warning to Hollande

Video by Oliver FARRY

Text by Ségolène ALLEMANDOU , Ben MCPARTLAND

Latest update : 2012-09-10

France's wealthiest man, Bernard Arnault, has sparked controversy by applying for Belgian nationality. His move has provoked a row over economic patriotism and focused attention on Hollande's decision to impose a 75 percent wealth tax.

President François Hollande’s plan to make sure the wealthiest help pull the country out of debt was once again under scrutiny on Sunday after seemingly being dealt a blow by France’s richest man.

Billionaire businessman Bernard Arnault caused anger and consternation among France’s lawmakers after it emerged Saturday that he had applied for Belgian nationality.

The 63-year-old head of the Louis Vuitton, Moët and Hennessy (LVMH) luxury goods empire lodged his application with parliament in Brussels last week.

His move comes as President François Hollande’s bid to balance the books through tax increases comes under increased scrutiny.

The proposed 75 percent tax rate on earnings over 1 million euros is due to be finalised later this month and will be included in the 2013 budget.

A political statement?

Arnauld has insisted on Sunday that his application was not motivated by money, nor should it be seen as a political statement.

"I am and will remain a tax resident in France and in this regard I will, like all French people, fulfil my fiscal obligations," the world's fourth-richest man told AFP.

"Our country must count on everyone to do their bit to face a deep economic crisis amid strict budgetary constraints," he said.

However, the close friend of former president Nicolas Sarkozy may have trouble convincing his doubters. Especially given his history of walking out on France when the political landscape may not be to his liking.

After the Socialist Party’s François Mitterrand triumphed in the presidential election of 1981, Arnault, whose fortune is estimated at 41 billion dollars, upped sticks and headed to the United States for three years.

“This move is above all a political message he wants to send to the French government,” a Paris-based economist, who preferred to remain anonymous, told FRANCE 24.

Former prime minister François Fillon of the right wing UMP party took advantage of the announcement to launch an attack on Hollande’s government.

Referring to the wealth tax, Fillon said: “When you make stupid decisions you can have frightening results.”

Heading for tax haven Monaco?

Despite Arnault's efforts to allay fears, France’s media has been full of speculation over the motives behind his decision to seek a Belgian passport.

Brussells-based tax lawyer Thierry Afschrift told French daily Le Parisien he was sceptical about Arnault’s motives.

“If the French government pursues an idea put forward by Nicolas Sarkozy to tax the revenues of French exiles around the world, then it would become an advantage to have dual nationality,” Afschrift said.

The financial landscape for billionaires appears much more amenable in Belgium with its lower tax rates, and unlike France, its neighbour does not have fortune tax. This may prove too tempting for Arnault, according to Afschrift.

Others tax experts have speculated whether the move is simply the first step towards him setting up in the tax haven of Monaco.

French citizens living in Monaco are bound by law to pay their taxes in France. But if Arnault simply renounces his French citizenship in favour of Belgian nationality, he will no longer be bound by such legislation.

Until now the French government has chosen not to enter the row, but on Sunday evening the president will almost certainly be grilled on the matter live on national television.

Hollande is expected to use the broadcast to announce a series of tax hikes, worth up to 20 billion euros, and several austerity measures.

France's economy just avoided entering a recession in the second quarter of this year. Unemployment continues to rise, with the number of jobseekers seeing its sharpest monthly increase in three years in July, hitting 2.99 million people.

 

Date created : 2012-09-09

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