The front page of the newspaper Liberation read “Get Lost You Rich Idiot” while French President Francois Hollande said that “Bernard Arnault should realize what it means to ask for another nationality … Being French is not just about receiving, it is about giving to your country.”
Arnault is even getting hit by the right. National Front leader Marine le Pen said Arnault was engaging in “scandalous behavior.”
In 1981, after the election of France’s Socialist president Francois Mitterrand, Arnault lived in the United States for three years.
In a statement, Arnault said that "I am and will remain a tax resident in France and in this regard I will like all French people fulfill my fiscal obligations. Our country must count on everyone to do their bit to face a deep economic crisis amid strict budgetary constraints.”
He added that his request for dual French-Belgian citizenship is “linked to personal reasons."
Indeed, tax lawyers say they are hard-pressed to find the tax benefits of Arnault’s proposed Belgian citizenship if he remains a tax resident. In France, tax obligations are determined by residency rather than citizenship. (Read more: Mass Migration of the Super-Rich)
Arnault says he will remain a resident of France, so he would still be subject to all or nearly all French taxes, lawyers say. That includes Hollande's proposed 75 percent tax on people making more than euros a million a year, as well as France’s wealth tax, inheritance taxes and real estate taxes, according to Jonathan Chazkal, a partner of the Belgian law firm Afschrift, which specializes in tax law.
In fact, Belgium’s income-tax rate of more than 50 percent is currently higher than France’s rate of around 45 percent. Lawyers say that if Arnault wanted to change his residency to avoid French taxes, he could become a Belgian resident at any time without becoming a Belgian citizen, which is far more difficult.
“If Arnault remains a French resident, which it seems is the case, his tax situation won’t change at all,” said Jean-Pierre S. Lavielle, a Connecticut-based attorney who specializes in French and international tax law. “All the French taxes still apply. I don’t see any obvious tax reason for becoming a Belgian citizen.”
Lavielle, along with other attornies, say that Arnault could be laying the groundwork for an eventual move from France in several years. He said that France recently imposed a costly exit tax on French citizens who change their residency. The tax can be up to 34.5 percent on his corporate shares, which for Arnault would be in the billions. (Read more: France's Rich Tax More for Show Than Dough)
Lawyers say that Arnault might be able to avoid the tax in several years if he becomes a Belgian citizen, gives up his French passport, and then becomes a Belgian resident or resident of another country.
“This could be a first step in a process,” Lavielle said. “It’s possible that in a year or two, he would change residency and citizenship. If the French government continues to take people to the cleaners, he might want a way out.”
-By CNBC's Robert Frank
Follow Robert Frank on Twitter: @robtfrank