Italian prosecutors are reported to have indicted the designers behind premium brand Dolce & Gabbana on tax evasion charges.
It is understood that Milan-based prosecutor Laura Pedio confirmed yesterday (November 22) that Domenico Dolce and Stefano Gabbana could now face trial. A preliminary hearing date has yet to be set.
It is not clear if the designers, who have previously denied the allegations, have decided whether to face trial to seek exoneration, or if they will negotiate and pay a fine. They would be personally liable for more than $1bn (£628.3m) in unpaid taxes and fines if they are found guilty at trial.
The Italian authorities accuse the designers of selling the Dolce & Gabbana and D&G brands to Gado Srl, a holding company based in Luxembourg, in 2004 but running the businesses from Italy, where taxes on sales royalty are higher. Each designer allegedly avoided €416m (£355m) in taxes.
In a statement released in May last year, Dolce and Gabbana said they had declared and paid everything that was owed to the authorities from the sale. They said the accusations were based on a “completely abstract calculation” and added that it overvalued the two brands.
Reports suggest that there is a separate criminal investigation into tax irregularities at the Dolce & Gabbana Group. It is based on police accusations that Gado was just a legal entity that was based in Luxembourg to avoid paying Italian corporate tax.