Dolce & Gabbana designers may face trial for tax evasion

by

Writer

24 March 2011

Italian designers Domenico Dolce and Stefano Gabbano are facing charges of tax evasion along with several Dolce & Gabbana company executives and a tax advisor. Papers filed by prosecutors in a Milan court allege a “criminal design” to defraud the state.

Prosecutors contend that the Italian revenue service is owed taxes on the sale of the brands (D&G, Dolce and Gabbana, D&G Junior), which they claim were sold well below market value. Prosecutors also allege that the Italian government is owed income from royalties, which were taxed in Luxembourg at a much lower rate than they would have been in Italy. The brands were sold for €360 million— an amount that investigators allege is only one third of their actual value. Both designers have been charged, as well as three company executives and their tax advisor.

Authorities will determine this Friday if a criminal trial will take place. If it does, the designers could face a maximum sentence of five to seven years in prison.