As you may have heard if you usually read the finance page of fashion related publications, last week the Italian Guardia di Finanza - the authority of the national Minister of Economy and Finance - seized assets worth €65m in a tax probe that inolved the sale of fashion houses Hugo Boss and Valentino in 2007.
Milan prosecutors ordered to confiscate assets including apartments in Milan and Rome, a villa in Cortina d’Ampezzo, a 15th century castle (Villa Trissino Marzotto), land and corporate holdings of 13 people linked to the Marzotto group (Vittorio, CEO Matteo, Maria Rosaria, Cristiana and Margherita Marzotto; Andrea, Isabella and Rosanna Donà dalle Rose; Barth Zech, Pierre Cladmi, Ferdinando Businaro and property entrepreneur Massimo Caputi), one of Italy's most important families in the fashion and textile sector.
The properties were seized (but not placed under seal because the order was issued to prevent the sale or dispersal) to cover 65 million euros in taxes the 13 people involved are suspected of having dodged when they made €200m capital gain from selling Valentino.
In 2007 Marzotto sold (for 5.3 billion euro) the Valentino Fashion Group, that included the Valentino label and Hugo Boss, to UK-based private equity group Permira. The latter then sold Valentino Fashion Group to Mayhoola for Investments, backed by a Qatari private investor group, in a deal valued at around €700m.
According to the investigation, people involved are suspected of having avoided Italian tax obligations using a Luxembourg-based holding company (purposefully created and administered from Italy, according to a police statement) for the sale.
Milan investigating magistrate Gianfranco Criscione stated in a report that the entire capital gain deriving from the Valentino Fashion Group deal was transferred to the Cayman Islands.
Lawyers of the Marzotto family (Niccolò Ghedini and Piero Longo, bettter known to Italians as Silvio Berlusconi's lawyers) stated the procedure was groundless highlighting that gains were declared and taxed.
While the Valentino sale to Permira is being investigated for tax fraud, Dolce & Gabbana will appear in court at the beginning of December, accused of evading €416 million of tax in relation to the sale of the Dolce & Gabbana and D&G brands to the designers' Luxembourg-based holding company Gado Srl (according to Italian police, Gado Srl was set up to enable the design duo to avoid the country's high corporate taxes; by the way, does “Gado” stand for Gabbana and Dolce? Because if it does, well, it shows a certain daftness from the design duo or from their advisors' part...).
Accused of setting up a holdings company in Luxembourg to avoid declaring over 840 million euros in sales to the Italian tax authorities in 2010, acquitted of tax evasion in April 2011 by a lower court that stated there was no foundation for a trial, the famous design duo was charged again by the Italian Supreme Court that overturned that previous decision last November.
Though D&G deny any wrongdoing, if convicted, they may face with their co-accused business associates up to three years in prison, or a fine (up to €1 million).
Stories such as these ones send us back to the mid-'80s when Aldo Gucci, son of Guccio Gucci, was sentenced at 81 to serve a year and a day in federal prison for conspiring to evade more than $7.4 million in U.S. income taxes.
Seeing that the current Italian technocrat government led by Prime Minister Mario Monti set the fight against tax evasion as one of its priorities (and that last month a Milan court sentenced previous Italian Prime Minister Silvio Berlusconi to four years in prison for tax fraud - a sentence reduced to one year by an amnesty law), it is only natural to wonder if any other fashion house, designer or celebrity boasting of living in houses full of designer clothes and accessories (and listing on her CV overpaid collaborations with huge global retailers...) will ever fall under the Italian Finance Police's radar.
Maybe the time for all of them has come to start paying taxes and live less grand and glamorous lives. Otherwise, this may be a very cold Autumn/Winter season for some of them, at least tax-wise...
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