I’ve been following this case through the highs and lows of it all, and it seems that finally, there is a conclusion. The design duo behind one of the most revered Italian fashion houses, Domenico Dolce and Stefano Gabbana, have been found not guilty by Italy’s highest court. This legal saga has been going on for 4 years with a lower court and an appeals court both finding the designers guilty of tax evasion and were sentenced to 18 months of jail time.
The design house was accused of committing tax evasion by selling their brand to the Luxembourg-based holding company, Gado Srl, in an effort to avoid higher corporate taxes in Italy, where the brand was originally based. The duo appealed the lower courts’ decision to Italy’s highest court with the their defense team arguing to the court that the two should not be held liable for any wrongdoing because they are of creative minds and don’t deal “with bills and schemes to cut their tax rate.”
Yesterday, a five-member jury deliberated the case and arguments presented and ruled that there were no grounds for a case, thus overturning the lower courts’ decisions.
And so, another legal saga concerning the tax practices of Italian brands comes to end. And, while the outcome is favorable for Dolce and Gabbana, other Italian brands would do well to take note and make sure their tax practices are above board, or else they may also be embroiled in a legal battle for years that could affect the reputation of the brand.
Fashion designer, Miuccia Prada, and her husband, Patrizio Bertelli, are under investigation by the Italian Tax Authority for tax evasion pertaining to Prada’s namesake brand, Prada SpA and tax paperwork that the company filed relating to foreign owned companies.
Prada SpA released a statement explaining that both Prada and Bertelli voluntary disclosed to the Italian Tax Authorities in December 2013 regarding certain issues about the company, and that these disclosures led to an agreement between the husband and wife and the Italian Tax Authority.
“Prada store in Singapore” by 22Kartika
In January of this year, Women’s Wear Daily reported that the pair were under investigation for unfaithful earnings declaration, and that the husband and wife paid $643.9 million to the tax office.
Another day. Another Italian tax dispute. Last week I talked about how Domenico Dolce and Stefano Gabbana are two of many Italian designers and brands that have been embroiled in tax disputes with the Italian government. Well, it seems that the design duo have lost their case.
Both designers and their accountant, Luciano Patelli, had appealed a lower court’s decision finding them guilty of tax evasion. And, today, the appeals court upheld that decision. The designers and their accountant were sentenced to one year and 6 months of jail time (though none of them will actually serve jail time because the sentencing is below the two-year minimum required in Italy).