We explain Bernard Arnault's salary and taxes – Cash Investigation

Bernard Arnault's Income Structure

• 💡 Bernard Arnault's income primarily consists of dividends from LVMH, totaling 3.17 billion euros in 2023, with a comparatively small salary of several million euros.
• 💰 For billionaires and centimillionaires who own large companies, the essential part of their income is from dividends (capital income), unlike the majority of people whose main income is salary.

Theoretical Tax Calculation

• 📊 Without the use of holding companies, Bernard Arnault's dividends would theoretically be subject to a 30% flat tax, while his salary would face a 45% marginal tax rate.
• 📈 Under this theoretical scenario, approximately 960 million euros (nearly a third of his 2023 earnings) would be paid in taxes.

The Role of Holding Companies

• 🔑 The primary mechanism allowing for lower tax payments is the use of a holding company, which manages a group of societies for an individual like Bernard Arnault.
• 🛡️ Holdings enable individuals to avoid a significant portion of the tax that would otherwise be due on dividends.

Tax Optimization Mechanism

• 💸 Instead of being directly taxed as personal income, the 3.17 billion euros in dividends are deposited into the holding company.
• 📉 While a small portion of dividends might be withdrawn for personal expenses and taxed at 30%, the vast majority remains within the holdings and is taxed at a radically lower rate of 1.25%.
• ✅ This strategy allows holding owners to optimize their taxes, as they only need to withdraw enough for their lifestyle, leaving the rest to be minimally taxed within the holding.

Impact on Tax Burden

• 📉 The use of holdings effectively allows Bernard Arnault to reduce his taxes by a factor of 10 compared to a scenario without them.
• 🔍 Research indicates that the effective tax rate for billionaires and centimillionaires is often very low, significantly less than what would be paid under standard fiscal rules.