MILAN — It was another day of numbers at the Milan courthouse during Friday’s hearing in the ongoing tax trial of Domenico Dolce and Stefano Gabbana.

This story first appeared in the May 6, 2013 issue of WWD. Subscribe Today.

The designers’ lawyers asked Bocconi University professors Lorenzo Pozza and Angelo Provasoli to give their own evaluation of the Dolce & Gabbana and D&G brands — one of the thorny issues at the heart of the trial.

In a hearing last month, Maurizio Dallocchio, corporate finance professor at Bocconi University and a former president of the Audit Committee of the European Investment Bank, analyzed the methodology employed by PricewaterhouseCoopers to evaluate the brands and the accusations by the Revenue Agency in June 2010, comparing the parameters used by each. Pozza’s and Provasoli’s goal was to determine the fair market value of the brands based on contracts and balance sheets.

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The analyses stem from the investigations that led to both designers being charged with tax evasion related to the 2004 sale of the Dolce & Gabbana and D&G brands to the designers’ Luxembourg-based holding company, Gado Srl. The Italian tax police reportedly consider Gado essentially a legal entity used to avoid higher corporate taxes in Italy.

Based on a business plan for the 2004-07 period, calculations of growing royalties and the company’s latest revenues, PricewaterhouseCoopers pegged the value of the Dolce & Gabbana and D&G brands at 360 million euros, or $484.4 million at current exchange.

According to the tax police calculations, which took into account lower tax charges in Luxembourg, the value of the brands was estimated at 1.1 billion euros, or $1.4 billion.

Pozza and Provasoli considered a period beginning from 2004 and elected to take wholesale revenues as their starting point. Like Dallocchio, they pointed to what they considered a “mistake” made by the Revenue Agency, which worked with the group’s retail sales, and defined the growth rate it had calculated — 20 percent — “unreasonable.”

The average royalty percentage point was set at 4.9. “In the first six years, we believed it to decrease from 23 percent to 4.9 percent, and then we held that as a constant. One of the few things we agreed upon with the Revenue Agency is that the brands were in a mature phase and we expected a slowdown in growth typical of labels at that stage,” said Pozza.

The tax rate was set at 33.87 percent, the average rate of industrialized countries in 2004, said Provasoli. Based on their calculations, the value of the brands should have been pegged at between 353 and 378 million euros, or $464 million and $496.5 million at current exchange.

Earlier that morning, Roberta Ardigò, who worked with defendant Luciano Patelli, the designers’ accountant, reiterated that Patelli had been tapped by Dolce & Gabbana to help restructure the company and sell the brands to an entity different from the designers.

Patelli’s studio, she explained, had been charged with the project of restructuring the company so that the brands would no longer be owned by the designers as individuals to avoid any “potential paralysis” of the group caused by “a potential discord” between Dolce and Gabbana. “The group without the brands would have been weaker, while it would have been more credible with the banks and in the case of an IPO,” said Ardigò. Patelli’s studio set about researching where the company that was going to buy the brands could be based. “It had to be a European country with an international and high financial standing,” said Ardigò. The studio, she said, “verified the relations with the fiscal administration in Luxembourg and the local taxes.”

The defendants’ lawyers were not pleased when prosecutor Gaetano Ruta implied that Luxembourg was chosen for tax reasons. Ruta also asked Ardigò the reasons for not selling the brands to an existing company. Ardigò reiterated that Patelli’s studio was thinking of “a scenario that would best fit the needs of a company that was considering a public listing,” and mentioned other international companies, such as Luxottica, which had shares listed in Luxembourg.

The designers, general director Cristiana Ruella, Patelli, Dolce’s brother Alfonso; finance director Giuseppe Minoni and Antoine Noella are charged with omitted and unfaithful earnings declarations. The defendants have denied the charges.

The scheduled hearing on May 15 was pushed back to May 29.