MILAN — Regrouping family shares in a vehicle based in Italy, rather than in Luxembourg, “would not have made any difference,” to the Marzottos in terms of the amount paid in taxes, according to consultant Andrea Fiorelli. Fiorelli took the stand during a hearing of the Marzotto tax trial on Friday, called upon by the lawyers for defendant Massimo Caputi, a real estate entrepreneur and broker for International Capital Growth. ICG is the firm that Italy’s tax police believe to be a fictitious entity based in Luxembourg and managed in Milan and allegedly created for the purpose of selling 29.9 percent of Valentino. Fiorelli was responding to a question by Judge Orsola De Cristofaro about the decision to locate ICG in Luxembourg. He asked De Cristofaro to take into consideration the international stance of the buyer, private equity fund Permira Advisers LLC.
Related Galleries
“Even the Agenzia dell Entrate [Italy’s Tax Agency] recognized that the motivations to set up ICG were not fiscal, but to create alliances and have more mass [to have control over Valentino],” observed Fiorelli. A vehicle, he contended, that could fuel additional financial operations. “There was nothing opaque” about Caputi’s intermediation, as the Agenzia delle Entrate “even rewards” companies that delegate the control of assets outside of Italy to a broker, through a lower tax rate. This is also a measure against money laundering. “It’s as if the assets were in an Italian bank, or taxed at the source, whether they are in London or Luxembourg.”
Comparing the tax rates of Luxembourg and Italy, Fiorelli said that on a capital gain of 200 million euros, or $228.7 million at current exchange, ICG would have saved 3 million euros, or $3.4 million, but ended up paying 19 million euros, or $21.7 million, in costs in setting up the structure there. “ICG would have paid 27.5 percent of taxes on 16 percent of the capital gain in Italy, or 29.5 percent of the 16 percent in Luxembourg,” explained Fiorelli.
Matteo Marzotto and his sister Diamante are indicted with other defendants for alleged omission of earnings declaration and tax evasion in connection to the sale of Valentino Fashion Group to Permira in May 2007.
The next hearing is scheduled on Oct. 28.