Updating our tax rate assumptions

Research evidence excerpt

Updating our tax rate assumptions

Idea

July 28, 2026 04:36 AM GMT

Morgan Stanley & Co. International plc+MLuxury | Europe Natasha Bonnet

Equity Analyst

Updating our tax rate Natasha.Bonnet@morganstanley.comEdouard Aubin +44 20 7677-5723

Edouard.Aubin@morganstanley.com +44 20 7425-3160

assumptions Grace Smalley, CFA

Grace.Smalley@morganstanley.com +44 20 7425-9629

Cedric Norest

Research Associate

Cedric.Norest@morganstanley.com +44 20 7425-1462

Key Takeaways

Brands

We believe the market may be underestimating the likelihood of the French tax Europe

surcharge being cemented amid the political risk and fiscal challenges in France Industry View In-Line

What’s Changed

We now incorporate the tax surcharge for LVMH and Hermès into our outer years

Hermes International S.C.A.

(our effective tax rate assumptions are +300-400bps higher than VA css for (HRMS.PA) From To

2027-2029) Price Target €1,930.00 €1,850.00

2027e ModelWare EPS (€) 51.35 49.56

Our France Economics teams have published this morning A Comprehensive 2028e ModelWare EPS (€) 57.10 55.12

Framework Ahead of French Elections, where they note that France faces a Richemont SA (CFR.S) From To

challenging political calendar with the budget season (autumn 2026), the Price Target SFr 225.00 SFr 220.00

2027e ModelWare EPS (€) 7.43 7.26

presidential election (18 April and 2 May 2027) and, in their baseline scenario, snap

2028e ModelWare EPS (€) 8.61 8.41

parliamentary elections around mid-June 2027. They believe these events are likely

to keep policy uncertainty elevated well into the middle of next year. We think there

is a risk for the French corporate tax surcharge to be extended into 2027 and

beyond.

LVMH, Hermès, Kering and Richemont are exposed to any changes to corporate tax

rates for large companies in France.