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Financial Planning > Tax Planning

Hollande Calls for ‘Patriotism’ From Luxury CEO

By Marlene Y. Satter

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The news that LVMH Moet Hennessy Louis Vuitton CEO Bernard Arnault, the richest man in France, filed last week for Belgian citizenship after President Francois Hollande announced a major tax on those with incomes over 1 million euros ($1.28 million) per year led to speculation that Arnault was taking the action to avoid the tax. In response, Hollande called for patriotism from Arnault, who, for his part, said that he would continue to pay French taxes.

Bloomberg reported Monday that after Hollande had announced a new, temporary 75% tax on the country’s high earners, reports began to surface that he would dilute the measure. However, Hollande repeated his campaign pledge to launch the new tax, with no exceptions, and said it would begin in 2013.

In response to Arnault’s request for Belgian citizenship, Hollande said in the report, “He should have reflected on what it means to ask for another nationality, because we are proud to be French. We have to call on patriotism at this time.”

Other speculation in the press included Le Monde’s opinion that Arnault was seeking Belgium’s lower tax rate. A Huffington Post report had questioned whether the new measure could even lead to a mass exodus of the wealthy from France.

However, that does not appear to be the case with regard to Arnault. The fourth richest man in the world, according to Forbes, Arnault said in the report, “I am and will remain a tax resident in France and in this regard I will, like all French people, fulfill my fiscal obligations.” He was quoted saying, “Our country must be able to count on everyone’s contribution to face the deep economic crisis.”

The Globe and Mail reported that a source close to Arnault said the move was prompted by a business deal and was connected to a “sensitive” investment project that could be easier to execute if Arnault held Belgian citizenship. Arnault himself said the move was a “personal action” that he undertook several months ago. “It must not be interpreted politically,” he added in the report.

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