Albert Frère, the billionaire, is known as the most French of Belgian tycoons. Now his business partner, Bernard Arnault, is poised to become Belgium’s most famous Frenchman if his application for citizenship succeeds.
Mr. Arnault’s pursuit of dual Belgian-French nationality has provoked a row about France’s image abroad, the economic policies of the Socialist government, patriotism and the utility of François Hollande’s 75 percent marginal tax rate on incomes over 1 million euros ($1.29 million). It has also put the spotlight on the business relations between two of Europe’s wealthiest men, given Mr. Arnault’s reputation as France’s shrewdest and most successful entrepreneur – with a personal fortune that has risen almost 10-fold to 21 billion euros in the past 15 years.
Mr. Arnault’s insistence that he will continue to be tax-resident in France has met with skepticism: most of the country’s media suspect his citizenship application is the first step in a tax planning move.
“The head of LVMH wants to become Belgian to?... continue paying his taxes in France,” ran a headline in Le Monde.
“There is a real growing feeling that ‘the rich’ are being hunted down in France at the moment,” said Bernard Grinspan, managing partner of the Paris office of Gibson Dunn, the law firm. “They are being stigmatized and this is encouraged from the top. A number of people left before the election and more since, especially people in the private equity world. Entrepreneurs are very worried.”
Mr. Arnault said he wanted Belgian nationality to develop his “numerous investments” in the country, though tax advisers point out that this does not require naturalization.
Groupe Bruxelles Lambert , the investment company Mr. Frère jointly controls with Canada’s Desmarais family, owns large stakes in French blue-chip companies.
The two men became friends three decades when their daughters played on the beach in St Tropez where they both have homes.
The Belgian baron and Mr. Arnault have business ties, including joint investments in Cheval Blanc, the Saint-Emilion vineyard, and Go Voyages, the internet travel company.
“I’ve always been pleased with the investments I’ve made with my friend Albert Frère and I regret not having followed him more, because I would have been a lot richer,” Mr. Arnault said a few years ago.
But any idea that the pair might be preparing a big move together was shot down on Tuesday by Mr. Frère who told Le Figaro newspaper: “We don’t have an actual project at the moment.”
One banker suggested that Mr. Arnault might be planning to replace BNP Paribas’ 11 percent stake in Pargesa —GBL's holding company. The Paris-based bank is winding down its estimated 500 million euros stake but Mr Frère said an investment by Mr Arnault was “absolutely not on the agenda—we don’t need that in order to do business together.”
If Mr Arnault’s application is linked to his business interests, Belgian nationality could help ease any political concerns in Brussels if he were planning a future alliance with Mr Frère’s company.
In Belgium, the issue of French ownership of Belgian companies is politically sensitive, as demonstrated by the takeovers of Fortis Bank’s Belgian operations by BNP and the French state’s intervention in saving Dexia Bank.
“It might help to be Belgian if you wanted to acquire a strategic industry in the country, such as media or defence. It might also help were the acquisition of assets of Mr. Frère to become a question,” said Franck Le Mentec, tax lawyer at CVML, the Paris-based solicitors.
The Belgian authorities are less likely to approve of an application for citizenship if they suspect tax issues are the main motive: Johnny Hallyday , the French singer unsuccessfully applied for Belgian nationality in 2005.
Armand De Decker, the mayor of Uccle, the Brussels suburb where Mr. Arnault bought a home last year, said on Monday: “He did not mention taxes to me he told me that he wanted to invest more in business projects here.” But the mayor added: “It’s certain that he has a resentment regarding the politics of his country which he considers is not welcoming to the spirit of enterprise.”