LVMH has written a cheque for 400 million euros to the French tax authorities to end the tax dispute that arose over the attempted takeover bid for Hermés. When it sold the shares package it had been accumulating since 2008 to the Dumas family in 2014, the French multinational made a capital gain of 3.8 billion euros, but these ended up in the coffers of a controlled company based in Luxembourg. Two years after this transaction and only a few weeks after the arrest of two of its executives on accusations of industrial espionage as part of the Hermés affair, LVMH has given in to the demands of the French tax authorities and has paid an amount (equal to 10% of net profits from 2015) consisting of the sum of 380 million in unpaid tax and 20 million in accrued interest. This is according to a report in the weekly newspaper Le Canard Enchaîné, which notes that the agreement will enable LVMH to avoid further legal hassles. Meanwhile, the French luxury holding company is closing the door to Amazon. “We believe the business of Amazon does not fit with LVMH full stop and it does not fit with our brands” Jean-Jacques Guiony, finance director at LVMH announced during a conference call with investors, when asked if the French maison would consider a future within the platform of the online colossus. “There is no way that we could do business with them for the time being,” he concluded. The question was asked because of the attempts Amazon is making to raise the level of “accessible luxury” in which it is seeking to establish itself with brands such as Michael Kors, Calvin Klein and Kate Spade. Analysts interpret the rejection in the light of fears that offers on the site would not match the quality level of the top brands, and because of the risk of discounted products.
The attempted takeover bid for Hermés has cost LVMH dear: 400 million to the French tax authorities. Meanwhile, Arnault has closed the door to Amazon.
