MILAN — Despite settling its tax case with Italy’s internal revenue service last year, Bulgari Group could be facing a trial.
A judge at the preliminary hearing level in Rome is set to evaluate the state prosecutor’s charges on May 6 and decide whether a trial should take place.
The charges refer to the 2006 to 2008 period, before the LVMH Moët Hennessy Louis Vuitton acquisition of the storied Italian jeweler. Brothers Paolo and Nicola Bulgari, as well as former Bulgari chief executive officer Francesco Trapani and 11 executives, are named as defendants.
In February 2014, while insisting it remained “certain of being in the right,” Bulgari Group agreed to pay a total of 42 million euros, or $57.2 million, to Italy’s tax agency.
The company said at the time that the settlement would 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.
At the time, the Rome-based jeweler said that because of “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 inquiry 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 has declared that the foreign firms at issue were “real and genuine companies performing an indisputable strategic role for the group, employing about 300 employees of various profiles.”
The police, on the other hand, in 2013 said 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 during the period of 2006 to 2008 and “only a part of the operations is to be challenged” by the authorities, Bulgari said at the time. It is understood the charges refer to a subsidiary based in Dublin.
The Bulgaris are the latest in a long line of Italian fashion industry figures — ranging from Giorgio Armani to Valentino Garavani and Giancarlo Giammetti — to be targeted by the country’s tax police. Most recently, Domenico Dolce and Stefano Gabbana were cleared at Italy’s highest court last year, while Matteo Marzotto’s trial is ongoing.