Good thing Domenico Dolce and Stefano Gabbana just became billionaires--because the designers may have to fork over a good chunk of their fortune to the Italian government.
According to WWD, Italy's Tax Commission is fining the designers a whopping 343.4 million euros, or $440.2 million at current exchange, plus interest, for alleged tax evasion
Dolce and Gabbana are accused of omitted and unfaithful earnings declarations, specifically related to the 2004 sale of the Dolce & Gabbana and D&G brands to the designers’ Luxembourg-based holding company, Gado Srl. According to Italy’s Internal Revenue Agency, Dolce and Gabbana moved the majority of their wealth to Luxembourg, a well-known tax haven, with the sole purpose of avoiding higher corporate taxes in their home country. The designers, for their part, deny all charges.
The sentence comes after years of yo-yo court decisions. The duo were first charged in 2010, after the Italian government accused them of not reporting over 840 million euros ($1.1 billion) in sales. However, the charges were dropped by a lower court due to lack of evidence.
But, in 2011, Italy’s Supreme Court re-opened the case and also ruled that tax avoidance, or tax mitigation, on an earnings declaration is a criminal offense under the law, and would justify a heftier fine and/or jail time. The $440 million confirms this charge, and denies an appeal Gabbana and Dolce filed with the court.
The battle, however, is not entirely over. According to WWD, the designers may still avoid the fine by if they decide to appeal and wait for a third degree sentence. Stay tuned.