Tax fraud: tax authorities abandon legal action against LVMH

The French tax authorities have decided not to pursue legal action against luxury goods giant LVMH on suspicion of tax evasion, a source at Bercy said on Tuesday, confirming a report by Mediapart.

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In February 2023, the French Court of cassation overturned a court ruling that invalidated a search of LVMH's premises by the tax authorities in 2019 and ordered the return of the documents seized. It referred the parties back to the Paris Court of Appeal.

However, the Direction Générale des Finances Publiques (DGFiP) has decided not to pursue the case, according to a source in Bercy, thereby abandoning its suspicions of tax fraud. "The question was whether to carry out another search after the Court of cassation ruling in 2023," it told AFP.

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"It seemed a bit pointless" four years later, because "this type of procedure is only of interest if there is a surprise effect" and "there was a risk that we would not find the documents" concerned, it added.

The Direction Nationale d'Enquêtes Fiscales (DNEF) had carried out a search in September 2019 at several sites of the French luxury giant, including LVMH's headquarters on Avenue Montaigne in Paris, in a case of potential tax evasion.

The tax authorities wanted to look into the role of a Belgian company, LVMH Finance Belgique SA (LFB), a cash centre that has since been repatriated to France. In 2020, the Court of Appeal invalidated the search and ordered the return of the documents seized, without allowing the DNEF to keep a copy. As the Court of Appeal's decision was enforceable, the documents were returned to LVMH.

Meanwhile, unrelated to this affair, in 2022 LVMH entered into a "tax partnership" with the tax authorities, the aim of which was to establish a dialogue between the parties, "to try to clear up in advance any issues that might appear problematic," according to the same source at Bercy.

"This reflects the group's willingness to be more transparent and to submit to us any tax problems associated with future transactions," the source added, stressing that this type of partnership, which had already been signed by around 70 groups, did not hinder any tax audits.