Popular opinion wasn’t enough to save Domenico Dolce and
Stefano Gabbana, the designers behind the highly lucrative fashion label Dolce
& Gabbana. Despite pleas on social media and protests from fans, an Italian
appeals court has upheld the decision reached last year in a lower court which
found the pair guilty of tax evasion.
The original criminal charges followed a stiff 343.3 million
euro ($439.70 million U.S.) fine ordered payable as restitution last spring. At
trial, a Milan tax court had ruled in favor of Italy’s tax authority, Agenzia
delle Entrate, finding that Dolce and Gabbana had engaged in a “conduct of
abuse with the only goal of obtaining a fiscal advantage.”
Speculation about Dolce and Gabbana’s tax maneuvering
stretches back nearly ten years. At that time, Dolce & Gabbana sold their
business to a Luxembourg-based holding company called Gado Srl. Dolce and
Gabbana control Gado and not coincidentally, Luxembourg is a popular spot for
holding companies due to its banking industry and tax friendly status. Italian
tax authorities suspected that the duo undervalued the company for purposes of
the sale in order to avoid paying tax on the transaction.
Shortly after the sale, Italian tax authorities started
asking questions about the pair’s finances. It would be the start of a lengthy
investigation into the luxury brand which started 28 years ago in Milan. Today,
the pair dresses models, actresses and socialites: their Facebook page
currently boasts such stars as Kylie Minogue, Jessica Lawrence, Lucy Liu and
this month’s Vogue cover girl, Kate Upton.
For now, Dolce and Gabbana are said to be “shocked” at the
ruling despite the fact that the original appeal was not expected to be
successful.
Another appeal is expected.
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