MILAN — Milan-based judge Simone Luerti last month ruled there was no foundation for a trial of designers Domenico Dolce and Stefano Gabbana for alleged tax evasion and dismissed the charges. In a 29-page ruling deposited with the court after 30 days and obtained by WWD, Luerti chastised Italy’s Revenue Office and its interpretation of the law, which he said was made “with a carelessness that was frankly excessive.”

This story first appeared in the May 5, 2011 issue of WWD. Subscribe Today.

Luerti said the 2004 sale of the Dolce & Gabbana and D&G brands to the designers’ Luxembourg-based holding company, Gado Srl, “was a real operation, corresponding to legitimate and precisely identified needs.” Italy’s tax authorities had alleged the designers had evaded taxes by transferring ownership of their firms to the holding firm.

Commenting on Luerti’s ruling, the designers’ lawyer, Massimo Dinoia, said this was “a sentence that, simply, can be defined as just.”

The judge said the sale of the brands was “real, effective and not simulated,” since banks preferred for the company’s assets to remain separate from the two designers as they feared potential discord between the two. Also, the decision to set up Dolce & Gabbana Luxembourg Sarl, controlled by the Italian holding firm, which would have bought the brands, “was dictated by two reasons: the first was the will to position the brands on an appetizing financial market, in light of an eventual listing on the stock market; the second reflected the goal to optimize the fiscal positioning,” in connection to the freedom to transfer activities within the European community.

“We had never doubted that the preliminary hearing could end in a different way, and the sentence made this clear,” said Dinoia. “There is nothing and there will never be anything.”

The judge’s decision cleared Dolce, Gabbana, accountant Luciano Patelli and four others involved: Dolce’s brother and board member Alfonso Dolce, managing director and board member Cristiana Ruella, and company managers Giuseppe Minoni and Antoine Noella.

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