Dolce and Gabbana | Source: Courtesy
Fashion designers Domenico Dolce and Stefano Gabbana have each been sentenced to 18-month jail terms for tax evasion charges. Italy's appeals court
upheld a verdict issued last June against the pair on charges of using
Luxembourg holding company Gado to avoid paying taxes on royalties of
about 1billion euros. The case stems from an investigation
that began in 2008 when Italian tax authorities stepped up their fight
against tax evasion as a global financial crisis began to bite.
Fashion companies have fallen under the
scrutiny of Italy's tax authorities partly due to the fact the sector
has performed well during the country's longest recession since World
War Two. The cases rarely come to court, however. Giorgio
Armani paid 270 million euros to tax authorities in early April to
settle a dispute over payments from the group's subsidiaries abroad. Prada
Holding, which controls Prada, paid a reported 400-420 million euros to
settle taxes in Italy after completing a process of voluntary
disclosure in December.
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