Italian court quashes Dolce & Gabbana fraud convictions

ROME - The Italian Supreme Court on Friday overturned fraud convictions and 18-month jail terms against celebrated fashion duo Domenico Dolce and Stefano Gabbana, their company announced.

"We have always been honest and we are extremely proud of this recognition by the Italian Court of Justice. Viva l'Italia," the two fashion house chiefs said in a statement.

"The Italian Supreme Court of Justice found Domenico Dolce and Stefano Gabbana not guilty of tax evasion," a company press release said.

In April an Italian appeals court had upheld a guilty verdict against Dolce and Gabbana for evading taxes totaling 200 million euros ($277 million).

Dolce and Gabbana, whose celebrity clients include Beyonce and Madonna, were accused of having transferred control of their brands to a shell company in Luxembourg in 2004 and 2005 to avoid paying Italian taxes.

Prosecutors had argued that setting up the Luxembourg company Gado -- an acronym of the surnames of the two designers -- while the operation was being run out of Italy was a bid to defraud the state.

They were found guilty in June 2013, and given 20-month jail sentences, which they appealed.

Dolce and Gabbana were originally accused of tax evasion of around one billion euros, but the court ruled that just 200 million euros of that sum was relevant.

On Friday the Supreme Court annulled the conviction, declaring that the prosecution case was "unfounded" and ending the case, Italian media reported.

source: www.abs-cbnnews.com

Dolce and Gabbana sentenced in Italian tax-fraud case

MILAN - Fashion designers Domenico Dolce and Stefano Gabbana were each given a reduced, suspended sentence of 18 months in jail on Wednesday for a conviction on charges of hiding hundreds of millions of euros from Italian tax authorities.

Italy's appeals court upheld a verdict issued last June against the pair, who are as famous as the stars they dress, on charges of using Luxembourg holding company Gado to avoid paying taxes on royalties of about 1 billion euros ($1.38 billion).

The sentence was reduced from 20 months because the statute of limitations applied to certain facts in the case.

A lawyer for Dolce and Gabbana, who have always denied any wrongdoing, said they would appeal the decision. "I am speechless. We are all shocked. The judgement is inexplicable and we will appeal," Massimo Dinoia said after the judgement.

A Milan prosecutor had asked the court in March to clear the pair, who - in a protest last year at being "pilloried" - closed the Milan shops where they sell clothes and accessories inspired by Dolce's native Sicily.

The previous decision, by a lower court, handed the duo suspended jail sentences of 20 months each and imposed a fine of up to 10 million euros over avoidance of the payments in Italy, where corporate taxes are among the highest in Europe.

The case stems from an investigation that began in 2008 when Italian tax authorities stepped up their fight against tax evasion as a global financial crisis began to bite.

Fashion companies have fallen under the scrutiny of Italy's tax authorities partly due to the fact the sector has performed well during the country's longest recession since World War Two.

"Luxury is one of the few sectors to have done well in recent years," said a partner specialising in tax at Grant Thornton in Milan who declined to be named.

"It is easier to go and ask for money where there is money as opposed to going to a troubled sector."

The cases rarely come to court, however.

Giorgio Armani paid 270 million euros to tax authorities in early April to settle a dispute over payments from the group's subsidiaries abroad.

Prada Holding, which controls Prada, paid a reported 400-420 million euros to settle taxes in Italy after completing a process of voluntary disclosure in December.

source: www.abs-cbnnews.com