Former Vuitton executives on trial for VAT fraud at Champs-Élysées store

A lavish Chinese client, who spent millions of euros on luxury goods at the Louis Vuitton store on the Champs-Élysées, allegedly received improper tax refunds. Five people, including former company executives, have been on trial since Monday at the Paris Criminal Court for organised fraud.

The court accuses the defendants of processing VAT refunds on the extravagant purchases of Lin C., who went by the name “Bruce” and presented himself as a Chinese billionaire. This tax refund scheme is typically available to foreign consumers residing outside the European Union. Lin C. was not eligible for these refunds because he was a French resident.

According to an internal audit by Louis Vuitton, the loss to the state amounted to 351,000 euros on 2.1 million euros of disputed purchases made by Bruce C. between 2016 and 2020 on the world's most famous avenue. Louis Vuitton, a civil party in the trial, has since settled this amount and dismissed the four employees involved.

This tax case in the world of “ultra-luxury” began when David M., a sharp young sales assistant at the Vuitton store on the Champs-Élysées, met Bruce C. at a pop-up for the leather goods brand in a boutique on the Rue du Faubourg Saint-Honoré.

“The clothes, watches, and jewellery he wore were pieces I had never seen anywhere else. He had watches worth 200,000 euros. He was nothing like the average Louis Vuitton client; he was looking for exceptional pieces,” testified the former Vuitton employee, dressed in a navy blue suit with white pinstripes.

The two men, who were of the same generation, quickly hit it off and began to regularly exchange messages about fashion and music.

The sales advisor thus brought Bruce C., who has since returned to China and did not appear at the trial, to shop at the Vuitton store on the Champs-Élysées. The store had an annual turnover of 250 million euros at the time and was one of the flagship locations for the famous monogrammed brand.

Privileged treatment

This “extraordinary client”, as the former store director called him in court, also brought in business. He quickly received the treatment reserved for luxury industry VIPs, or “Very Important Customers” (VICs). This included invitations to fashion shows and private dinners; personalised in-store service; and the opportunity to buy pieces unavailable to the general public.

“Gradually, he became more and more demanding, particularly regarding the favours he wanted, such as invitations. He also became demanding about the tax refunds his friends could receive. He started to play us off against other stores in Paris and abroad,” said David M., 35.

The prosecution argues that in order not to lose this generous, sales-boosting client, his dedicated salesperson and certain Louis Vuitton executives allowed him to access improper tax refunds of varying amounts as a commercial gesture. They turned a blind eye to the fact that he was a French resident and that some purchases on his behalf were made under other names.

The defendants, including the former general manager of Vuitton France, dispute this interpretation.

For certain transactions, Bruce C. would come to the counter with “nominees”. These were Chinese tourists visiting Paris, provided to him for a commission by a specialised agency. This was done so that Vuitton could issue a tax refund form in their name for customs.

“At no point was there any intention of putting someone else's purchases under another person's name. I don't dispute the fact that we knew the products were going to Mr C. (...) If the nominee ultimately resold the products to Mr C., we didn't particularly like it, but there was nothing illegal about it,” argued Guillaume L., former director of the Champs-Élysées boutique, before the judges.

The trial is scheduled to last until Wednesday.