Even top designers must pay taxes if they don’t want to find themselves in front of a judge.
In May 2009, Guardia di Finanza, the fiscal crimes division of the Italian police, investigated fashion powerhouses Domenico Dolce and Stefano Gabbana over the 2004 sale of their two labels: Dolce & Gabbana and D&G. Luxembourg-based holding company Gado bought both brands for €360 million (approximately $508 million)—an amount prosecutors said was well below the brands’ value. Both Dolce and Gabbana allegedly evaded a total of €416 million in taxes.
In addition to the tax evasion charge, both men were additionally criminally investigated over tax irregularities at the Dolce & Gabbana Group. These irregularities added up to a total of €200 million in alleged unpaid taxes—a national offense that could’ve landed Dolce and Gabbana in prison for up to three years or seen them fined for up to €1 million.
However, Milan Judge Simone Luerti decided in April 2011 that Dolce and Gabbana would not have to stand trial for the tax evasion allegations. “The accusations were groundless,” Massimo Dinoia, the lawyer in the case for Dolce, Gabbana, and three other company co-defendants, told the New York Times in response to the dropped charges.
Unfortunately for Dolce and Gabbana, they are once again under investigation. Italy’s equivalent of the Supreme Court in the U.S. has now overturned the decision to not prosecute. Gabbana immediately took to Twitter to express his frustration, calling the State “ladri”—“thieves” in Italian—and accusing it of not knowing “what to do to get money out of us.” WWD reported that this comment was removed from his Twitter before being replaced by the following: “It’s really true that in Italy they do what they want…as they please…Perhaps it would be best to leave…” he tweeted.
Well, if Dolce and Gabbana do leave Italy, I’d suggest they pay their taxes in full first.