China’s tax crackdown on wealthy individuals has become the latest headache for luxury brands, as the China tax crackdown on luxury brands collides with faltering consumer spending in the United States just as the $350 billion sector heads into third-quarter results season.
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- Reuters reported on October 9, 2026, that Beijing’s new tax rules are squeezing wealthy Chinese luxury buyers.
- Wealthy individuals who used offshore trusts to shelter assets have until October 22 to declare and pay years of back taxes.
- Shares in LVMH and Hermès are down about 40% this year; Gucci owner Kering is down 29%.
- Chinese consumers account for roughly a fifth of global luxury purchases.
- Summer shopping mall data in mainland China pointed to a “sharp deceleration in growth”, according to Bernstein analysts.
The October 22 Deadline Weighing on Luxury Brands
Under Beijing’s new tax rules, wealthy Chinese who used offshore trusts to shelter assets have until October 22 to declare and pay years of back taxes — a move that threatens to curb spending in one of the industry’s most important markets.
Chinese consumers, who account for roughly a fifth of global luxury purchases, were long the driving force behind the sector’s growth. Demand has weakened sharply since the COVID pandemic, and the new 20% levy is now hitting spending by ultra-high-net-worth individuals — a group that had until recently proved more resilient than middle-class consumers hurt by China’s prolonged property downturn.
“Until the deadline to pay the tax, some people may face liquidity issues,” said Alexis Bonhomme, head of Shanghai-based luxury consultancy Trinity Asia. “This doesn’t mean they won’t start buying again, but right now, the mood just isn’t there.”
US Spending Slowdown Adds to the Strain
The tax crackdown is not the sector’s only problem. Luxury brands are also grappling with the fallout from the Iran war and signs of slowing consumer spending in the United States, their other great growth engine.
The combination of challenges is likely to weigh on third-quarter results due from next week, reinforcing fears that the $350 billion luxury sector — mired in a three-year slowdown — may struggle to regain its former momentum.
Luxury Stocks Near Multi-Year Lows
Investor pessimism is already visible in share prices. Shares in LVMH and Birkin bag maker Hermès are both down about 40% this year and trading near multi-year lows, while Gucci owner Kering has fallen 29%.
| Luxury group | Share performance in 2026* |
|---|---|
| LVMH | Down about 40% |
| Hermès | Down about 40% |
| Kering (Gucci owner) | Down 29% |
*As reported on October 9, 2026.
With the October 22 tax deadline approaching and third-quarter results imminent, the coming weeks will show whether the world’s biggest luxury houses can stabilise demand — or whether the sector’s three-year slowdown deepens further.
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