Dolce & Gabbana goes on tax trial
05 December 2012
Posted by: SAIT Technical
By Reuters (Business Day)
Executive summary (SAIT Technical)
Italian fashion designers Domenico Dolce and Stefano Gabbana went on trial recently for tax invasion in Italy. This follows the tax trial of Prime Minister Mario Monti. Dolce and Gabanna are accused of not declaring taxes on royalties of about EUR 1 billion.
MILAN — FASHION designers Domenico Dolce and Stefano Gabbana, who count pop star Madonna and model Naomi Campbell among their clients, went on trial on Monday for tax evasion in one of the biggest tax cases involving celebrities in Italy.
The case is one of the few high-profile tax disputes to go to court in Italy, where the government of Prime Minister Mario Monti has launched a clampdown on tax dodgers that has included highly publicised police raids in yacht marinas and chic ski resorts.
The designers, who deny any wrongdoing and did not attend the hearing yesterday, stand accused of not declaring taxes in Italy on royalties of about €1bn.
Prosecutor Laura Pedio alleges the duo sold their D&G and Dolce & Gabbana brands to a holding company they set up in Luxembourg in 2004 in order to avoid paying taxes in Italy, where corporate tax rates are among the world's highest.
The two Italian business partners had been cleared from accusations of tax cheating by a previous Milan court last year. But a higher court overturned the acquittal, paving the way for the trial.
The designers have kept a low profile on the case after Mr Gabbana lashed out at the high court's decision last year, saying on Twitter he could leave the country.
"Everyone knows that we haven't done anything,” Mr Gabbana said in a tweet in June when the Milan court ordered the trial.
Six other people, including a tax consultant, also face trial. If found guilty, they risk being sentenced to as much as five years in prison.
At Monday's hearing, a lawyer for Mr Dolce and Mr Gabbana asked the court to annul the trial on grounds of alleged irregularities in the notification of proceedings.
The court will decide on the request on December 14.
The designers did not comment on the case yesterday and their lawyer was not immediately reachable for comment.
Previous tax cases involving celebrities in Italy have led to out-of-court settlements, agreements that avoid long legal proceedings and possibly harsher punishments. In 2000, the late tenor Luciano Pavarotti paid more than $12m in back taxes.
Argentinian soccer great Diego Maradona owes about €38m in taxes to Italian authorities, according to media reports. He has said he wants to clear up his situation.
Former MotoGP world champion Valentino Rossi agreed to pay $51m to Italy's tax agency in 2008 after a lengthy probe.