Forbes has published an article, “Investigation: How Billionaires Park Vast Wealth In Tiny, Tax-Light Luxembourg”, which discusses how some of the world’s wealthiest have hidden billions of dollars in European holding companies. The article begins as follows:
In August, French mogul Bernard Arnault—the world’s third-richest person and the chairman of luxury conglomerate LVMH—sold his 5.5% stake in French retailer Carrefour for about $850 million. According to annual reports, he owned most of those shares through Cervinia Europe, a company registered in the tiny European country of Luxembourg. Arnault established Cervinia Europe in 2013 and then transferred part of his Carrefour stake to the firm from another Luxembourg entity, Blue Capital S.a.r.l., which he had set up to hold his Carrefour shares in 2007, when he first purchased a 9.1% stake.
Those aren’t Arnault’s only assets held through Luxembourg, a financial hub half the geographic size of Delaware. Outside of the Carrefour stake, he owns more than two dozen Luxembourg-based entities that held $1.6 billion in private investments as of December 2020. Some notable benefits: If Arnault liquidates Cervinia Europe, he can keep the proceeds (and the cash from selling the Carrefour shares) tax-free. And thanks to Luxembourg’s 100% tax exemption for dividends—a break that kicks in after a holding company has kept at least $1.4 million worth of stock, or 10% of a company’s shares for a year—he may have collected nearly $900 million in Carrefour dividends since 2007 tax free. A spokesperson for Arnault declined to comment.
He may be the richest person investing via Luxembourg holding companies but he’s hardly the only one. Luxembourg is favored by billionaires and rich investors for its lightly regulated holding companies, wealth-friendly tax regime and abundance of tax attorneys, accountants and advisors—and until two years ago, its relative secrecy.
Click here to see the full article: “Investigation: How Billionaires Park Vast Wealth In Tiny, Tax-Light Luxembourg”
Posted by Marin Larkin, Associate Editor, Wealth Strategies Journal.