Investigations made by the prosecutor’s office in Milan determined that two Bottega Veneta foreign branches were allegedly actually operating in Italy. The amount due to be paid by Kering relates to additional taxes and interest the prosecutor claims is owed to the Italian government.
“In the spring of 2019, given the rapid changes in its business environment, its strong international growth and some uncertainties of Italian legislation, Bottega Veneta proactively made contact with the Italian Revenue Agency to discuss its tax position,” Kering said Friday in a statement. “This agreement is the result of those discussions. Given the prudent assessment of tax liabilities in Kering’s accounts in recent years, this will have no impact on the group’s results in 2022 or on the normative recurring tax rate in future years. Kering will continue to base its relationship with tax authorities on trust and transparency over the long term.”
Similarly, in 2019, Kering concluded a settlement with the Italian Revenue Agency relating to claims connected to its Swiss subsidiary Luxury Goods International S.A. (LGI). The claims regarded “the existence of a permanent establishment in Italy in the period 2011-2017 with the associated profits, and the transfer prices applied by LGI in the same period with its related party Guccio Gucci SpA.” Kering paid 897 million euros in additional taxes, along with further payment for penalties and interest. The total required payment amounted to 1.25 billion euros.
The investigations identified an alleged tax evasion of 1.4 billion euros. According to the Italian tax authorities, in distributing Gucci products in Italy through a directly operated Switzerland-based company named Luxury Goods International, Kering had intentionally avoided the payment of taxes in Italy.
Among the international companies that have settled with the Italian Revenue Agency, in 2016, Apple paid a sum of 318 million euros and the following year, Google paid a total of 306 million euros to regularize its fiscal position in the country. Other fashion companies that have settled with the Italian tax authorities over the years range from Prada to Bulgari.