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19 Jun 2013

Dolce and Gabbana handed jail sentence for tax evasion

Two of the world’s most famous fashion designers are given a suspended jail sentence of one year and eight months for hiding hundreds of millions of euros in tax evasion.

Domenico Dolce and Stefano Gabbana have dressed countless celebrities from Kylie to Kate Moss in the past few decades.

But on Wednesday, the pair were found guilty of tax evasion at a Milan court, and both given a suspended jail sentence of one year and eight months. It is unlikely they will spend any time in jail, given the complexity of the Italian appeals process.

The case is the latest brought by the cash-strapped nation’s tax agency, which has carried out highly publicised raids and upped its scrutiny of tax structures.

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

The fashion designers, who draw inspiration from Italy’s “dolce vita” style of the 1950s, were not present at court and deny all charges. A company spokesman could not be reached for immediate comment.

Mr Gabbana’s only reaction so far has been to tweet the branch of a colourful citrus tree, just seconds after the verdict, followed by pictures of flowers.

The Dolce and Gabbana fashion house is one of Italy’s most successful, and the brand’s tightly fitted corset dresses and sharply-tailored suits have earned them a glamorous lifestyle. High profile clients include Madonna and Naomi Campbell, and their pieces are regularly features of red carpets.

The case against the fashion designers dates back to a 2008 investigation, 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.

They were initially cleared of the charges in 2011 at a previous trial but Italy’s highest court overturned that ruling.