Today marks the beginning of Dolce and Gabanna’s tax evasion trial in Italy. The Italian fashion duo are accused of evading €416 million of tax. Authorities allege that their sale of the Dolce & Gabanna and D&G brands in 2004 to a Luxembourg-based holding company, Gado Srl, was to evade higher corporate taxes in their home country of Italy.
The charges against the pair were originally brought in 2007. However, in 2011 these charges were dismissed by a lower court which ruled there was no foundation for a trial. This decison was then turned over by the Supreme Court in November 2011, stating that “tax avoidance on an earning declaration is a criminal offense under law.” Previously, tax evasion was not considered a crime under Italian law. Dolce & Gabanna now risk a criminal record in addition to huge fines if found guilty.
The trial comes as Mario Monti, Italy’s prime minister, has declared the government to be “at war” with tax evaders. Monti’s stance on tax evasion is quite the opposite of his predecssor Silvio Berlusconi, who was famous for his lenient approach to tax evasion. “Some measures adopted by the government against tax evasion may seem like war measures and, in reality, they are,” Mr Monti said last month. A spokeswoman for Dolce and Gabbana in Milan refused to comment about the case.