Bernard Arnault, Questioned by the Senate, Defends his Role in the French Economy

In a fragile economic climate, the head of the world's leading luxury goods company defended the importance of his group's investments in France and reiterated LVMH's key role in the national economy, while denouncing the threat of relocations in response to increased tax pressure. “It is unfair for the state to turn against companies that, on the contrary, should be supported,” Arnault said. The LVMH boss pointed out that his group is a major investor in France. In 2023, LVMH injected €3.5 billion into the country, and more than €1.5 billion the following year. He also highlighted LVMH's impact on employment in France, with 40,000 employees within the company.

Arnault's comments raise questions about the relationship between the state and the private sector, particularly with regard to public aid. Since the COVID-19 pandemic, the state has introduced measures to support luxury companies, including subsidies and guaranteed loans to maintain activity and preserve thousands of jobs in this crucial sector.

However, this financial support is increasingly being criticized. Some believe that companies benefiting from public funds continue to raise the possibility of relocating their operations in the event of excessive tax or regulatory pressure. Arnault has also mentioned these threats of relocation, particularly after the US administration announced an increase in customs duties. LVMH's factories in the United States are already prepared to increase production to limit the impact of these new taxes.

This dilemma highlights a major issue: can public aid be justified for companies whose economic decisions could harm national competitiveness, particularly in the event of tougher tax or regulatory conditions? The debate on tax optimization by large companies, and in particular subsidiaries located in tax havens, was also raised during the hearing.

In response, Bernard Arnault defended LVMH by stating: “We are probably the most patriotic group in the CAC 40, and the one that pays the most taxes in France, despite the fact that only 8% of our turnover comes from the French market.”

As the debate intensifies, the question remains: could stricter regulation of public aid cause these luxury giants to leave the country for more tax-friendly climes? The luxury sector remains a major pillar of the French economy, representing $154 billion in revenue and 615,000 jobs. French companies account for 25% of global sales in this sector.

Arnault's position therefore comes at a time when tensions between the need to support the economy and the competitive imperatives of private companies are threatening to redefine the future of luxury goods in France.