Arnault caused uproar in France in September last year when it emerged he had applied for Belgian citizenship. He was accused of seeking the move to avoid France's proposed 75 percent tax, although this was firmly denied by Arnault himself.
In an interview with French daily Le Monde on Wednesday Arnault explained why he was giving up his quest.
“I underestimated the impact of this action, which I had been assured, would have been done with the utmost discretion,” Arnault said.
“Today I have decided to remove all doubt. I have withdrawn my request for Belgian nationality.” The billionaire also reaffirmed that his application was not motivated by a desire to escape the French tax man.
“I repeatedly said that I would stay a resident of France and would continue to pay my taxes,” he added.
Arnault's change of heart comes after his application had hit a few obstacles when it was being examined by Belgian authorities.
In January his request to become Belgian was held up because he could not prove that Belgium had been his principal residence for the last three years, as is required.
Arnault’s Belgium based businesses were also the subject of an on-going inquiry by authorities and immigration authorities in Brussels also advised against granting him Belgium nationality.
Arnault has an estimated personal worth of $24 billion according to Bloomberg News.
Much of his wealth has come from the Louis Vuitton fashion house, Moët winery and Hennessy cognac house.