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Bikkembergs Issues Rebuttal to Tax Charges

Belgian designer Dirk Bikkembergs says accusations are "shameful."

MILAN — Saying the allegations were “shameful,” Belgian designer Dirk Bikkembergs issued his most detailed rebuttal on Thursday of charges that he evaded taxes in Italy.

This story first appeared in the July 16, 2010 issue of WWD.  Subscribe Today.

Bikkembergs’ company said that the accusations are “shameful towards a foreign investor” that has “attempted to set up a part of its business in Italy, not to mention the damage to the reputation of a designer who has done much to contribute to the local economy.”

The inquiry by the Guardia di Finanza, an Italian police force under the authority of the Minister of Economy and Finance that investigates tax evasions and related violations, resulted in allegations that Bikkembergs evaded tax payments of 111 million euros, or $141.2 million at current exchange rates.

The investigation is focusing on two companies, 22 Srl, which produces clothing in Fossombrone, Italy, for Bikkembergs’ brand, and Luxembourg-based IFF Sarl, the distributor of the brand’s products.

The authorities alleged that the designer’s organization is in Italy and that revenues were redirected to Luxembourg instead of being declared and taxed in Italy.

The company argued in its statement that it relies on “multisite operations (which apparently the Italian tax authorities seem to both ignore and contest)….The assessed amounts are in fact greater than the total direct sales for the Group over the period of the tax control, which was from 2001 to 2006.”

Bikkembergs contends that tax authorities applied “a one-sided adjustment” for value-added tax, which is similar to a sales tax, applying VAT to all sales “without allowing IFF and 22 Srl to deduct such VAT.”

In addition, authorities “calculated corporate income tax on IFF’s gross margin,” the company said. “IFF’s gross margin is what is left after purchasing goods from 22 Srl. After deduction of local costs in Luxembourg, the remaining margin is used to finance all other activities, such as marketing, order taking, advertising, photo shoots, fashion shows, general personnel and administrative costs — the everyday costs of a fashion business.”

The company said authorities maintained “that all such activities took place in Fossombrone, which is factually incorrect given the existence of other companies and people in Luxembourg, Antwerp, Paris, and Milan performing these activities.”

“Needless to say, we are appealing this very unfair decision,” said the company.

Bikkembergs was one of the Antwerp Six, an influential group of designers from Belgium’s Royal Academy of Fine Arts that included Ann Demeulemeester and Dries Van Noten, among others. Bikkembergs, known for his soccer-inspired designs, launched his first men’s line in 1988, followed in 1993 by a women’s collection. Since the spring 1989 season, the designer has worked only with Italian manufacturers.