Fashion Designers Dolce And Gabbana Sentenced To 18 Months In Prison

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Fashion designers Domenico Dolce and Stefano Gabbana have each been sentenced to 18-month jail terms for tax evasion charges - despite the prosecution arguing for the pair to be acquitted.


Italy's appeals court upheld a verdict issued last June against the pair on charges of using Luxembourg holding company Gado to avoid paying taxes on royalties of about 1billion euros (£820million).

The pair were each given suspended sentences of 18 months in jail  - reduced from 20 months because of statute of limitations applied to certain facts in the case.

The designers - who have always denied any wrongdoing - said they would appeal the decision.

Lawyer Massimo Dinoia said: 'I am speechless. We are all shocked. The judgement is inexplicable and we will appeal.

'The prosecutor himself asked for them to be cleared.'

The Milan prosecutor had asked the court back in March to clear the pair, who - in a protest last year at being 'pilloried' - closed their Milan stores.

The previous decision, by a lower court, handed the duo suspended jail sentences of 20 months each.

A fine of up to 10 million euros was also imposed over avoidance of the payments in Italy, where corporate taxes are among the highest in Europe.

The case stems from an investigation that began in 2008 when Italian tax authorities stepped up their fight against tax evasion as a global financial crisis began to bite.

Fashion companies have fallen under the scrutiny of Italy's tax authorities partly due to the fact the sector has performed well during the country's longest recession since World War Two.

'Luxury is one of the few sectors to have done well in recent years,' said a partner specialising in tax at Grant Thornton in Milan who declined to be named.

'It is easier to go and ask for money where there is money as opposed to going to a troubled sector.'

The cases rarely come to court, however.

Giorgio Armani paid 270 million euros to tax authorities in early April to settle a dispute over payments from the group's subsidiaries abroad.

Prada Holding, which controls Prada, paid a reported 400-420 million euros to settle taxes in Italy after completing a process of voluntary disclosure in December.