LVMH to pay €800 million tax increase to reduce France's debt

LVMH may pay up to €800 million in additional taxes next year after France announced its intent to raise levies on its largest corporations to aid in public finance recovery, according to LVMH CFO Jean-Jacques Guiony. Last week, France unveiled a budget plan to increase taxes on wealthy companies and households, aiming to reduce debt. This plan includes temporary levies on over 400 major companies generating more than €1 billion in annual revenue, with a target of €8 billion by 2024 and an additional €4 billion by 2026. Moët Hennessy Louis Vuitton SE, currently paying 4.5% corporate tax in France, would pay around 10% if this hike goes through, Guiony said. “Just to ensure no one feels we are not contributing to the current budget efforts,” he concluded.

“France accounts for 7% of revenue, one-third of pre-tax income, and 40% of taxes” for the group, he noted. The group led by Bernard Arnault, facing slower growth in 2024 like the rest of the luxury sector, earned over €86 billion in revenue in 2023. The 2025 budget is a key part of initiatives by Prime Minister Michel Barnier to restore political and fiscal order after months of volatility and uncertainty following President Emmanuel Macron’s decision to dissolve the National Assembly and call for early elections. Stellantis NV CEO Carlos Tavares predicts the French corporate tax plans could hamper investment.

A grim development for the luxury giant, especially given this year’s lackluster results. LVMH’s fashion and leather goods division recently announced a 5% sales drop in Q3, falling short of analysts’ expectations of 0–2% growth. Group-wide, third-quarter sales fell by 3% on an organic basis to €19.1 billion ($21 billion). The decline was mainly due to slower growth in Japan, where the yen’s value rebound ended a spree of bargain-hunting by tourists. Despite the uncertain economic climate, LVMH has expressed confidence in its strategy focused on maintaining the desirability of its brands and the quality of its products.