Domenico Dolce and Stefano Gabbana have appealed their tax-related conviction and jail sentence in a 90 page appeal filed this week at Milan’s courthouse. The designers’ lawyer Massimo Dinoia claims that the duo have always focused on fashion and style, not management.
Back in July, Dolce & Gabbana were each sentenced to one year and eight months in prison after being found guilty of tax evasion. The Italian designers were found to have evaded €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 judge said that the only purpose in setting up a company such as Gado was “to transfer earnings derived by royalties in Luxembourg” and that they were effectively the “beneficiaries.”
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 avoidance was not considered a crime under Italian law. Dolce & Gabanna are being sent to jail for a crime that wasn’t even illegal at the time they committed it!
The designers vehemently deny the charges and in response to July’s ruling and subsequent statements by Milan’s Councillor for Commerce Franco D’Alfonso in which he referred to the duo as “tax evaders”, Dolce & Gabbana closed their shops for three days in protest. They hung up window signs that said “CLOSED FOR INDIGNATION” and took to twitter saying “The City of Milan makes me sick!!!” and “Shame on you!!! Boors” They added that the shut-down of the stores was a “signal of our disdain.” Attached to the statement was a table of the top financial contributors to the city of Milan for 2005, showing Dolce and Gabbana in fourth and fifth place respectively.
A date for the appeal trial, which will be presided over by prosecutors who are part of the Appeal Court, has not been set. More to come on this one!