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Corporate Jun 20, 2013

Fashion designers Dolce and Gabbana sentenced to jail for tax evasion

Milan: Fashion design duo Domenico Dolce and Stefano Gabbana were on Wednesday handed a suspended prison sentence of one year and eight months for hiding hundreds of millions of euros from the tax authorities.

The designers, who are nearly as famous as the stars they dress, were not present in court in Milan and have denied the charges. Given the complexity and length of the appeals process, they are unlikely to spend any time in jail.

Public prosecutor Gaetano Ruta had asked for two and a half years. The judge gave them a suspended sentence.

Reuters

Reuters

A company spokesman declined to make an immediate comment.

The success of Dolce and Gabbana's sexy corset dresses and sharply tailored suits favoured by celebrities like Kylie Minogue, Kate Moss and Bryan Ferry have earned them a glamorous lifestyle.

They hosted friend and client Madonna for her birthday in 2009 at their villa perched above the chic boating resort of Portofino.

The case dates back to an investigation that began in 2008, when authorities unleashed a tax avoidance crackdown as the financial crisis began to bite. But the probe that ensnared the two designers is one of the few high-profile cases to come to trial so far.

The judge on Wednesday ruled that the pair sold their brand to Luxembourg-based holding company Gado in 2004 to avoid declaring taxes on royalties of about 1 billion euros.

The pair's flamboyant designs are inspired by the sultry southern Italian island of Sicily, where Dolce was born in 1958. He met Gabbana, now 50, in the latter's home town of Milan, where they showed their first collection in 1985. The brand took hold internationally in the 1990s and global revenues hit just under 1.5 billion euros in 2011.

The pair have always said they are innocent.

"Everyone knows that we haven't done anything," Gabbana tweeted in June 2012 after the trial was ordered.

But Gabbana's only reaction so far on Wednesday was to tweet a close up photograph of the branch of a colorful citrus tree, just seconds after the verdict.

Reuters


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