TAX BREAK: Despite their recent scandal in China, Domenico Dolce and Stefano Gabbana have reason to celebrate the holidays: The designers have been cleared of tax evasion charges also at a fiscal level.
While Dolce and Gabbana were acquitted in 2014 at a penal level at the end of seven years of legal troubles — which included an acquittal from charges of fraud from a judge at the preliminary hearing level in 2011, a reversal at a higher court, new charges of tax evasion and two trials at lower court — fiscally in Italy the issue was not resolved and meant they could be hit by a fine by the tax commission. Case in point, in March 2013, Italy’s tax commission fined the designers 343.4 million euros, plus interest.
The fine by the tax commission is separate from the tax evasion trials, but both stem from the same accusations put forward by Italy’s Internal Revenue Agency of omitted and unfaithful earnings declarations.
The designers were charged with alleged tax evasion totaling 416 million euros 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 considered Gado essentially a legal entity used to avoid higher corporate taxes in Italy. The investigations began in 2008 and were initiated by the Guardia di Finanza, an Italian police force under the authority of the national minister of economy and finance.
Now, the judges of Italy’s highest courts, the Cassazione, have issued their verdict and they believe Gado was actually an active company in Luxembourg and that it had its own organization, although the decisions were made at the group’s headquarters in Milan.