The Italian government sentenced a one year and eight month imprisonment term for renowned Italian fashion designers Domenico Dolce and Stefano Gabbana for tax evasion. The government accuses them of hiding millions of euros from Italian tax authorities. The two designers have not left a public statement about their case. However, they have denied the charges and are still suspended until their appeal.
The Italian government had worked on the Dolce and Gabbana case in the last six years as part of their plan to crack down on tax evaders. Investigators discovered Dolce and Gabbana had moved their brand to a holding company named Gado in Luxembourg in 2004. Gado was clearly a play in the two designers’ surnames.
The judge said he believes the pair did this to avoid declaring royalty taxes of around 1 billion euros (£833 million) and the pair actually sold the business below its actual market value. Even if they were cleared of the charges in April 2011, the highest court of Italy overturned the ruling.
The Dolce and Gabbana brand is a highly-celebrated company that have Maddona, Kylie Minogue and Kate Moss as customers. Observers estimate that their tax evasion row may have minimal effect on their brand.