LVMH founder's controlling stake held in Belgium: source

PARIS Thu Jan 24, 2013 3:39pm EST

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PARIS (Reuters) - Bernard Arnault, France's wealthiest man, shifted part of the family holding through which he controls luxury giant LVMH (LVMH.PA) to a holding company based in Belgium, a source close to LVMH said, confirming a newspaper report on Thursday.

Arnault, the founder and chief executive of LVMH, transferred a 31 percent stake in Groupe Arnault to Pilinvest in December 2011, according to newspaper Liberation.

He also transferred the voting rights attached to 48.5 percent of the equity of the holding to Pilinvest, Liberation said. Arnault had already donated the 48.5 percent stake in Groupe Arnault without voting rights to his five children.

The source did not confirm the size of the transfers.

LVMH declined to comment on the report.

Arnault has been seeking Belgian citizenship, a move a spokesman for LVMH said last week was aimed at protecting a foundation he created to maintain the unity of his family's holding in case he passes away.

According to the statutes of the foundation, which is to run until 2023, administrators must be at least 50 years old, which would prevent Arnault's five children from ever sitting on its board and selling their stakes or part of the group or their assets.

The holdings of Arnault and his children would be automatically transferred to the foundation if Arnault were to die before 2023. The children would then simply receive dividends.

Arnault's demand for Belgian nationality anticipates a European law coming into effect in August 2015, which would allow him to apply the inheritance law of the country whose passport he carries, Dekeysers & Associates lawyer Gregory Homans said.

Such a move would protect Arnault's holding from attempts to contest his will by his children under French law upon his death.

The chairman of the foundation is Thierry Breton, a former French finance minister and France Telecom CEO who is now chief executive of IT services group Atos (ATOS.PA), the source close to LVMH confirmed.

Arnault's application for Belgian citizenship has caused an uproar in France, perceived as an attempt to dodge French President Francois Hollande's planned tax hikes on the wealthy. Arnault has since said he planned to remain a fiscal resident of France.

(Editing by Leslie Adler)

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Comments (1)
France, the US and many other countries with a progressive tax system have an inherently fragile revenue model. This fragility exists whether you think such a system is “fair” or “unfair” and is caused by the natural outcome that a very small number of people provide a very large portion of the total personal taxes collected. Generally, the top 1% contribute approximately a third of the total, while the top 0.1% contribute over 10% but is comprised of a minuscule number of individuals.

Contrary to Occupy Wallstreet dogma, the 1% or even the 0.1% are hardly homogeneous regarding their value system or attitude toward taxation. Just remember that both Michael Moore and Bernard Arnault are in the 0.1% group. About the only common attribute (aside from their wealth) is that as a result of globalizing “flattening effects”, they are no longer bound to the tax home of their birth in order to make or maintain their wealth. In short, they are no longer “sticky” and can leave easily and quickly.

The danger for France, the US or any other country with a progressive tax system is that they only need a tiny number of the 1% or 0.1% to leave their tax regime to cause a catastrophic effect on their future tax revenue. An individual such as Depardieu, Mickelson, Saverin or even Arnault with not, by themselves, bring France or the US to its fiscal knees. However, such high profile opinion leaders may inspire other “Golden Geese” to leave. With such a fragile revenue model, an exodus of even a small number of Golden Geese could spell disaster.

Jan 24, 2013 7:50pm EST  --  Report as abuse
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