Arnault slams France’s tax plans: ‘Encouragement to relocate’

Bernard Arnault, CEO of the world’s largest luxury firm LVMH, strongly criticised the French government during a hearing in the French Senate. In his argument, he stated that “it is very bad for the state to interfere in the management of private companies”. This statement came in response to President Emmanuel Macron’s recent call for economic patriotism.

The hearing was part of a broader evaluation of state support for large companies. Arnault emphasised that government interference in strategic corporate choices has rarely led to good results in the past. The chief executive said: "In general, that leads to catastrophes." He added that LVMH is “perhaps the most patriotic company in France”, with strong roots in the French economy and culture.

‘Tax increase could drive luxury industry out of France’

LVMH – owner of iconic brands such as Louis Vuitton, Dior, Moët & Chandon and Hennessy – had already criticised new fiscal proposals in the French budget for 2025 earlier this year. These include an increase in corporation tax for large companies. Arnault fears that such measures will encourage companies to relocate, moving production to countries with more favourable economic conditions.

The US has become particularly attractive in that regard, especially under the investment climate stimulated by Donald Trump’s re-election campaign. LVMH now owns three Louis Vuitton production facilities in the US, including one in Texas. Arnault stressed, however, that this is not a new phenomenon. He said: “We have been producing in the US since 1989; there is nothing new under the sun.” According to him, the American customs regulations offer significant advantages for locally produced goods.

Fashion as a global industry

Arnault’s comments touch on a broader tension in the luxury sector: how do companies remain true to their national roots in an industry that operates increasingly globally? The French fashion industry, often seen as cultural heritage, is simultaneously driven by international demand, global production and complex supply chains.

François-Henri Pinault, CEO of rival Kering (parent company of Gucci, Yves Saint Laurent and Balenciaga), agreed with this realistic vision. During a previous hearing, he stated: “It’s no secret that Gucci makes Italian bags from leather from Texas.”

Patriotism versus pragmatism

The discussion underlines the growing tension between national policy and the reality of an international market. While political leaders are pushing for economic patriotism, large luxury groups continue to optimise their production and investments worldwide. This presents policymakers, companies and consumers with a difficult balance: remaining true to the French heritage, without losing competitiveness on the world stage.

For the French luxury sector, which accounts for billions of euros in exports and hundreds of thousands of jobs, such debates are anything but theoretical. The outcome of these debates may determine the course of some of the world’s most influential fashion houses.

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