There’s a new scandal surrounding Montreal’s Atelier de Joël Robuchon, as Le Devoir has revealed that the ultra-high-end restaurant may be exploiting a loophole to reduce the taxes it pays.
The newspaper has revealed that the restaurant is operating in part under a business name that is registered in Luxembourg. That tiny European country is a popular tax haven among many multinational companies — by registering in Luxembourg and funnelling profits there, companies can reduce the amount of taxes they are liable to pay. Luxembourg is a popular destination for multinationals to register in, due to relatively low corporate tax rates, and other financial advantages (for example, the country was previously notorious for its highly secretive banking sector, although laws to clean it up were put in place in 2014).
While there are few precise details on how Robuchon’s Montreal restaurant might engage this Luxembourg company, Le Devoir suggests that chunks of the restaurant’s income or profits may be logged under that foreign entity, reducing the tax bill that the restaurant would owe to the Quebec government.
Even though there’s no concrete proof of the restaurant’s profits being siphoned to Luxembourg, an expert cited by Le Devoir argue that a tax evasion scheme is the only logical reason for the company to have this Luxembourg connection — in short, nobody sets up a company headquartered in Luxembourg just for the fun of it.
While such a strategy is not illegal, it could be considered unethical. It’s also particularly unusual in the case of the Robuchon restaurant: the restaurant is in effect, a public-private partnership due to its affiliation with Quebec’s state gambling authority, Loto-Québec. That means that if profits are being funneled to Luxembourg to lower the restaurant’s tax bill, it’s being done so in extraordinarily close proximity to the Quebec government.
Even though the Robuchon restaurant was effectively brought to the province by Quebec’s government (via Loto-Québec), precise details of the restaurant’s corporate structure and finances have been all but impossible to confirm. Prior to this news, it had been suggested that the restaurant operated as some sort of franchise, where the Quebec government paid for the rights to the Atelier de Joël Robuchon name, and Loto-Québec took all responsibility for the restaurant (and reaped any potential benefits, including profits).
It now seems that this kind of franchise arrangement is not the case, and a private entity seeking to profit from the restaurant is more directly involved — however, when Loto-Québec has been asked to provide or confirm such details, it has refused, citing trade secrets. (An access to information request that Eater filed in 2018, seeking financial details of the restaurant, was rejected for identical reasons).
It’s not a good look for the Robuchon restaurant: when it opened in 2016, it drew heavy criticism, because an undisclosed sum of public money (through Loto-Québec) was used to bring in a foreign chef’s restaurant, instead of showcasing local talent. The sum paid to bring the Robuchon name to Montreal was never confirmed, although $11 million was one figure that was cited.
The Quebec Liberals in government justified the restaurant at that time by highlighting the potential benefits it would have for Montreal’s tourism industry. But now that the restaurant could possibly be siphoning money away from provincial tax coffers, the restaurant could appear to be less of a financial boon.