D&G: Fashion Designers Domenico Dolce And Stefano Gabbana Sentenced To Jail For Tax Evasion

An Italian court has sentenced fashion house duo Dolce & Gabbana to one year and eight months in prison for tax evasion of 200 million euros ($282 million).

They were also ordered by the court in Milan to pay a fine of 500,000 euros to Italy’s national tax agency.

Lawyers for Dolce and Gabbana, whose celebrity clients include Beyonce and Madonna, immediately said they will appeal, and under Italian law the sentence will be suspended in the meantime.

Domenico Dolce and Stefano Gabbana were accused of having transferred control of their brands to a shell company in Luxembourg in 2004 and 2005 to avoid paying Italian taxes.

Prosecutors had argued that setting up the Luxembourg company Gado – an acronym of the surnames of the two designers – while the company was operating out of Italy was a bid to defraud the state.

They had called in May for the pair to be sent down for two years and six months.
 

In her closing speech at the trial, prosecutor Laura Pedio said there was “rock-solid proof” that the duo had committed “sophisticated tax fraud”.

She said Gado was “a sort of cloud with the consistency of gas,” while fellow prosecutor Gaetano Ruta said it was “an artificial construction the aim of which was to get a tax advantage”.

Although Dolce and Gabbana had originally been accused of tax evasion of around one billion euros, the court ruled that just 200 million euros of that sum was relevant.
 

Four other people, including Dolce’s brother Alfonso, were given suspended jail sentences.

Investigators completed a probe into the designers and five other people, in 2010 and the case was dismissed in April 2011 but reopened in November last year and went to trial.

“All that I care about is making clothes, that’s all. Let them do and say whatever they want,” Gabbana tweeted about the trial in April.

“To be accused of something that’s not true is not a pretty thing, but the heart of the matter is, who cares, we’ll all end up in the ground in the end,” he said.

Founded in 1985, Dolce & Gabbana employs more than 3000 people and has 250 shops in 40 countries around the world.

Two years ago, a judge threw out a tax evasion and fraud case against the pair, whose label Dolce&Gabbana is a Milan fashion mainstay. Italy’s high court later ruled the designers could be prosecuted for tax evasion, but not for fraud.