Tax evasion: 18 months in jail for Dolce & Gabbana
MILAN: Fashion designers Domenico Dolce and Stefano Gabbana were each given a reduced, suspended sentence of 18 months in jail on Wednesday for a conviction on charges of hiding hundreds of millions of euros from Italian tax authorities.
Italy’s appeals court upheld a verdict issued last June against the pair, who are as famous as the stars they dress, on charges of using Luxembourg holding company Gado to avoid paying taxes on royalties of about 1 billion euros. The sentence was reduced from 20 months because the statute of limitations applied to certain facts in the case.
A lawyer for Dolce and Gabbana, who have always denied any wrongdoing, said they would appeal the decision. “I am speechless. We are all shocked. The judgement is inexplicable and we will appeal,” Massimo Dinoia said.
A Milan prosecutor had asked the court in March to clear the pair, who — in a protest last year at being “pilloried” — closed the Milan shops where they sell clothes and accessories inspired by Dolce’s native Sicily.
The previous decision, by a lower court, handed the duo suspended jail sentences of 20 months each and imposed a fine of up to 10 million over avoidance of the payments in Italy, where corporate taxes are among the highest in Europe.
The case stems from an investigation that began in 2008 when Italian tax authorities stepped up their fight against tax evasion as a global financial crisis began to bite.
Fashion companies have fallen under the scrutiny of Italy’s tax authorities partly due to the fact the sector has performed well during the country’s longest recession since WWII. The cases rarely come to court, however. Giorgio Armani paid 270 million to tax authorities in early April to settle a dispute over payments from the group’s subsidiaries abroad.