Milan prosecutors have recently wrapped up their probe into an alleged tax evasion scheme involving the esteemed fashion brand Gucci, with an estimated value of 1 billion euros ($1.13 billion). This significant development paves the way for a potential trial, as revealed by a judicial insider on Tuesday.
In the absence of a settlement between the implicated parties in the next 20 days or the emergence of fresh evidence, the case will move forward to the courts. The prosecution suspects Gucci, a prominent label under the Kering luxury conglomerate, of potentially transferring profits from sales in Italy to a jurisdiction with more favorable tax regulations.
The prosecutors allege that Gucci owes around 1 billion euros to the Italian tax authorities for earnings amassed between 2010 and 2016. They argue that the revenue reported by Gucci through Luxury Goods International (LGI), a company based in Switzerland that manages the distribution and logistics platform for many of Kering’s luxury brands, should have been subject to Italian taxation rather than Swiss taxation.
The current CEO of Gucci, Marco Bizzarri, and former CEO, Patrizio Di Marco, are subjects of the investigation into these allegations. However, immediate comments from representatives of the two executives were unavailable.
In response to the accusations, Kering, the parent company of Gucci, has expressed confidence in the legitimacy and transparency of its business practices and is actively collaborating with the authorities investigating the matter.
This ongoing tax inquiry involving Gucci underscores the intense scrutiny faced by luxury brands regarding their financial operations and underscores the critical importance of adhering to international tax laws in the fashion industry.
For more information on tax compliance in the fashion industry, check out these useful links:
Vogue Business – Luxury brands under pressure from tax authorities
Forbes – Gucci’s licensing agreement and tax implications
