MILAN — Bulgari Group has settled its tax case with Italy’s internal revenue service, the Agenzia delle Entrate, and, while insisting it “remains certain of being in the right,” has agreed to pay a total of 42 million euros, or $57.2 million.
This story first appeared in the February 14, 2014 issue of WWD. Subscribe Today.
The company said the settlement will help “avoid a lengthy and costly confrontation over an issue whose interpretation is objectively uncertain.” Bulgari and the agency settled on a payment of 28 million euros, or $38.1 million, but the addition of taxes, interest and other fines brings the total amount to 42 million euros.
The Rome-based jeweler said that thanks to “substantial documentation” the revenue office “has recognized the actual existence and real operations of the companies outside Italy and has declared three of the four notifications that followed the fiscal enquiry entirely unfounded.”
The internal revenue service’s investigations were focused on alleged fraudulent earnings declarations and evasion of tax payments of around 3 billion euros, or $4.08 billion, starting from 2006, through a system of allegedly fictitious companies in the Netherlands and Ireland, set up in order to avoid paying taxes in Italy.
Bulgari declared that the foreign firms at issue were “real and genuine companies performing an undisputable strategic role for the group, employing about 300 employees of various profiles.” The police last year said that Bulgari allegedly “omitted to declare corporate income taxes in Italy for almost 3 billion euros in the period 2006-2011, as well as a regional tax on production for more than 1.9 billion euros [$2.5 billion]. Dividends that were unduly not taxed in the same period totaled more than 293 million euros [$381 million].” The corresponding amount of unpaid taxes totaled more than 46 million euros, or $62.6 million.
The only remaining claim by the tax office now refers to a number of operations that took place as part of a company reorganization in the 2006-2008 period and “only a part of the operations is to be challenged” by the authorities, said Bulgari. “In particular, the agency has not identified any false or artificial accounting and, while adopting regulations different from those of the group, it has recognized that at the time of those operations, the norms were of difficult and uncertain application.”
The company concluded by expressing “faith that the documents acquired in the administrative area will contribute to a positive conclusion of the criminal procedure and that no felony has taken place.”
Last March, Bulgari said it was going to disprove allegations of fraudulent earnings in Italy, and also accused Italian authorities of waging a campaign in the media to destabilize the Roman jeweler by seizing assets.