Dolce & Gabbana's Italy Tax Evasion Case Goes Back to Court

Source: Vittorio Zunino Celotto/Getty Images Europe

Domenico Dolce and Stefano Gabbana, the Italian design duo behind the sexy fashion house Dolce & Gabbana, were charged with tax evasion in their native Italy in 2009 which was then dismissed by a lower court in 2011.  The Italian supreme court overturned it now the case is going to back to court.  The case involves a 2004 sale of the designer's eponymous label and lower priced line D&G to their Luxembourg-based holding company, Gado Srl.  Luxumbourg's corporate tax rate is 4% while Italy's is 45% which on its face seems incriminating enough.  

The  Italian tax police believes Gado was operating and managed in Italy and cites emails from around the time of the sale which shows that the designer's motives for the sale were for the explicit purpose of tax evasion.  Italy claims the label owes close to $500 million to the government.  Also, the designers would be looking at 5-year prison sentence if found guilty.  
Mr. Dolce & Mr. Gabbana who were not present during the hearing are probably busy preparing for Fashion Week in Milan.  Two more hearings are scheduled for February 6th and 20th.  

But don't feel too bad for them; they became the latest billionaires according to Bloomberg News. 


Read More:
Forbes: Amid Tax Scandal, Italy's Bad Boys Of Fashion Dolce And Gabbana Become Billionaires
WWD (subscription red'q): Hearing in Dolce, Gabbana Tax Case Takes Place
Bloomberg: Dolce and Gabbana Become Billionaires Amid Global Spending Spree