François-Henri Pinault

MILAN — Kering has officially settled its Gucci tax dispute in Italy.

On Thursday, the luxury fashion conglomerate said it signed an agreement with the Italian Revenue Agency to regularize its fiscal position in Italy.

Kering will pay a total sum of 1.25 billion euros, including 897 million euros in additional taxes, to the Italian Revenue Agency, which investigated the company’s tax payments related to the sales in Italy of Gucci products between 2011 and 2017.

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.

The settlement, one of the biggest with the Italian tax authorities, is expected to significantly impact Kering’s 2019 results. In particular, the income statement will include an additional tax charge of about 600 million euros and the cash flow statement will feature an outflow of 1.25 billion euros. In 2018, Kering posted revenues of 13.7 billion euros.

Among the international companies that recently 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.

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