The Italian appeals court upheld a ruling by a lower court from last June that Domenico Dolce and Stefano Gabbana are indeed guilty of tax evasion, despite the designers' and their lawyer's insistence that they did nothing wrong. Both designers and their accountant Luciano Patelli have been sentenced to one year and six months of jail time, Reuters reports. However, because Italy has a minimum two-year sentencing for jail time, they will not actually spend any time in a cell. (Sentences of less than three years are served with house arrest or community service.)
Still, the designers' lawyer says they plan to appeal, again. The case dates back to 2004, when the designers sold the brand to a holding company, Gado, which they had set up in Luxembourg. Tax authorities believed they did this to avoid paying taxes in Italy. And 10 years later, the case drags on.
(A rep for Dolce & Gabbana did not immediately respond to our request for comment.)
It's not the only fashion tax evasion case Italian courts have been busy with over the past year. Prada Holdings recently settled with tax authorities, agreeing to relocate holding companies similar to Dolce and Gabbana's in the Netherlands and Luxembourg (both lower-tax regions) back to Italy and pay 420 million euros in backdated tax. Despite this, Miuccia Prada and Patrizio Bertelli are reportedly still under investigation. And Armani recently had to pay $373 million to settle a dispute over a subsidiary in Switzerland. Clearly, tax authorities in Italy are not messing around, and fashion companies haven't been clever enough in their attempts to avoid them.