Either Italian designers really detest paying taxes or the Italian government really loves delivering trumped up charges. In either case, Domenico Dolce and Stefano Gabanna are the latest Italian designers to be indicted for tax evasion. If found guilty the duo could be personally liable for more than $1 billion in unpaid taxes—in addition to a fine of up to $1.3 million and a possible three-year prison sentence.
The charges brought on by a Milan prosecutor, which have been part of an investigation that began in 2008, accuse Dolce and Gabanna of tax evasion and abuse of rights pertaining to the 2004 sale of the Dolce & Gabanna and D&G brands to the Luxembourg-based holding company Gado Srl, WWD reports.
The designers have dismissed any wrongdoing from the get-go, however if a judge decides to proceed with a court trial, they'll have three options: cut a deal, pay a fine, and wipe their hands clean of the mess; continuing protesting their innocence, go to trial, risk losing, pay a bank-breaking sum and possibly go to jail; or choose a fast-lane trial which relies on less evidence and witnesses for the sake of a speedy verdict, and would result in a penalty reduced by a third.
Though it's unknown what Dolce and Gabanna's next step will be, the two have argued that the police claims are loose intepretations based on a tax regulation that could tax a business based on its value versus its actual sale price. Though they only received $447.8 million from the sale, the authorities claim that the brands were actually worth as much as $1.37 billion. "We wish!" the designers said.
Dolce and Gabanna are hardly the first designers to find themselves in tax-related trouble with the Italian authorities. Last year Valentino and his partner were delivered a $45.1 million fine for tax evasion (which was eventually levied in relation to potential undeclared earnings) based on their residences and tax declarations outside of Italy, while Roberto Cavalli was cleared of tax evasion charges two years ago—only after a six-year court battle. Salvatore Ferragamo SpA, Gianfranco Ferre, Santo Versace, Giorgio Armani, Gerolamo Etro have all faced similar charges, more likely the results of extortion on the part of the Italian government than actual fact. Though news of the charges against Dolce and Gabanna isn't exactly flattering, at least the pair is in very stylish company.
