PARIS – French luxury group Kering has refuted a new media report of alleged tax evasion published by Mediapart, a French investigative and opinion newspaper, stating it is fully compliant with tax laws in Switzerland.

The article published on Friday, citing “confidential documents,” alleged that an ongoing Italian tax investigation into the group’s cash-cow brand Gucci may implicate other brands.

Mediapart estimated that Kering had saved 2.5 billion euros in taxes it should have paid in Italy and France by attributing wholesale revenues from brands including Gucci and Yves Saint Laurent to its LGI logistics center in Cadempino, Switzerland, thereby benefiting from a lower local tax rate.

Kering said the Swiss company was established in the Nineties, prior to the group’s acquisition of Gucci Group, and now employs more than 600 people.

“LGI is a strategic hub namely for the centralized distribution and logistics of Kering brands,” it said in a statement.

“All of the group’s companies established in Switzerland carry out tangible business activities. As a result, the group pays its due taxes in Switzerland, in compliance with the law and the fiscal status of the company. This business operating model is known by French and other competent tax authorities,” it added.

Mediapart said Kering had transferred around 20 Gucci employees to Switzerland as part of the tax optimization scheme, but alleged that some of them continued to effectively work in Italy. Gucci’s headquarters are located in Milan. Kering did not address these allegations in its statement.

The French newspaper also said Kering operates subsidiaries in the Netherlands and Luxembourg as shell companies to benefit from tax breaks, which Kering denied. “As regards Kering Holland NV and Kering Luxembourg SA, these companies do not provide any tax benefit to the Kering Group,” it said.

At the company’s full-year results presentation in February, Kering chief financial officer Jean-Marc Duplaix said the group had not set aside any tax provisions linked to the Italian tax investigation into Gucci because the probe was still in its preliminary stages.

“The brand is collaborating fully with the authorities,” he said, reiterating that Kering and Gucci have implemented a governance that aspires to ensure full compliance with tax regulations at all levels, including their employees.

Duplaix added that the figures published by Mediapart and other media in their original reports on the investigation in January were “guesswork on the part of journalists.”

However, he added that ongoing changes to the group’s operating model, linked to activities such as product development, lead times and omnichannel sales, would likely result in a gradual increase of its tax rate from 23 to 25 percent in the medium-term.

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