PARIS — Karl Lagerfeld, one of fashion’s hardest-working — and most handsomely remunerated — designers, has come under the scrutiny of France’s tax authorities.
The revelation was made by French news weekly L’Express, which published a three-page article Wednesday under the headline “L’argent voyageur de Lagerfeld,” or “Lagerfeld’s traveling money” in English.
The report alleges that Chanel’s couturier and Fendi’s fur and ready-to-wear designer avoided declaring more than 20 million euros, or $21.6 million at current exchange rates, in earnings over the past six years by funneling funds through companies located in Ireland, Britain, the British Virgin Islands and the United States.
According to L’Express, the income in question stems not from his regular fees from fashion houses, which include his signature firm controlled by private equity fund Apax Partners, but from photography work and assorted freelance projects. Among the latter are residential lobbies for condominiums in Canada, a hotel in Macau and VIP helicopters.
The multitasking designer has also done collaborations with such fashion brands as S.T. Dupont, Hogan and jelly shoe brand Melissa, plus cosmetics firm Shu Uemura, to name but a few. Lagerfeld has shot campaigns or calendars for clients as diverse as Dior Homme, Pirelli and the carmakers Seat and Rolls-Royce, and has does editorial work for magazines including V, Numero and Harper’s Bazaar.
So-called “tax shaming” has become a hot-button topic in Europe as many large multinationals, including Starbucks, Google and Amazon, have come under fire for avoiding paying taxes on sales on the Continent by legally exploiting loopholes and tax havens. It’s less common for high-profile individuals to be called out for using similar mechanisms.
Sources close to Lagerfeld acknowledged Wednesday that his accountants and financial advisers are having an “open discussion” with French tax authorities, while hastening to add that Lagerfeld pays “millions” in taxes in France.
A German national and resident of Monaco, the designer declined to comment.
When L’Express contacted the French tax authority in attempts to confirm its findings, the authorities declined to comment on the report, citing “tax secrecy.”
Probes involving fashion figures are more commonplace in Italy. The legal troubles that hit Domenico Dolce and Stefano Gabbana — both ultimately exonerated — were only the latest and most visible of several other fashion houses and designers who have seen the tax man come knocking, including Giorgio Armani, Miuccia Prada and her husband Patrizio Bertelli, and the Marzotto and Bulgari families, among others.
Yet the French Socialist government of François Hollande has earned a reputation for looking dimly on wealth. In 2012, Lagerfeld admonished the government’s antirich attitude — exemplified by Hollande’s then-proposed 75 percent tax rate on incomes over 1 million euros — in the 25th-anniversary issue of Spanish Marie Claire, which he guest-edited.
International media seized on Lagerfeld’s use of the word “imbécil” (idiot, in English) to describe Hollande, which Marie Claire acknowledged was misleading and taken out of context, with editor in chief Joana Bonet clarifying to WWD that the word referred to the antirich policy.
During the interview, Bonet said to the designer, “I hear Hollande hates the rich,” to which he replied, “He’s disastrous. He wants to punish them and, of course, they’re leaving (the country). Nobody is investing. Foreigners don’t want to invest any more in France — and this is not working. Besides, France — apart from fashion, jewelry, perfume and wine — is not competitive. Nothing else sells. Who buys French cars? Not me,” he said at the time.
Lagerfeld later addressed the furor on national TV, denying he used the term idiot. “Of course I never said that! I don’t speak Spanish, I speak a little of Italian but no Spanish,” he said.
“I saw him [Hollande] on TV and I found him very fun, spiritual and intelligent,” the designer said, adding, “The luxury business is an industry that makes a lot of money and should not be considered like something we should be ashamed of.”
That same year, Bernard Arnault, chairman and chief executive officer of LVMH Moët Hennessy Louis Vuitton and France’s richest man, withdrew his application for Belgian citizenship, weary of the polemic around his loyalties and his staggering fortune. Squelching lingering speculation he was seeking to escape France’s notoriously high taxes, Arnault told Le Monde that he initiated the citizenship quest to protect his Belgian interests and LVMH’s in the case of his death and reiterated he would remain a fiscal resident of France.
The executive lamented that in France, whether under a leftist or right-leaning government, entrepreneurs are looked upon dimly. “In Germany, the U.K. or the United States, one condemns poverty in order to fight it, while in France, we condemn wealth,” he told the paper.
The French government quietly bid adieu to its “supertax” on the rich in 2014.