Kering, the renowned luxury conglomerate and parent company of Gucci, is reportedly close to reaching a milestone agreement to settle a prolonged tax conflict with Italian authorities. The deal, estimated to be worth between 1.3 to 1.4 billion euros, would go down in history as the biggest tax resolution ever made between a corporation and the Italian tax authorities.
Insiders familiar with the matter have revealed to Reuters that Kering is poised to officially ink the agreement with the Italian tax body in early May, bringing an end to the protracted tax dispute. The disagreement centers around alleged unpaid taxes linked to Gucci, an iconic fashion label that falls under the expansive Kering portfolio.
Throughout the negotiations, Kering has maintained a constructive and transparent dialogue with the Italian tax authorities. Although the precise sum has yet to be officially confirmed, the French luxury powerhouse is unwavering in its determination to amicably address the issue.
Earlier this year, Kering disclosed a substantial unpaid tax claim of 1.4 billion euros in Italy. Despite contesting the initial findings, the company has reiterated its adherence to tax laws, vehemently denying any accusations of tax avoidance.
The focus of the inquiry has been primarily on Kering’s offshoot, Luxury Goods International (LGI), situated in Switzerland. Allegations suggest LGI may have bypassed tax responsibilities on profits earned outside of Switzerland, with a significant emphasis on Gucci. This intense scrutiny led to police raids on Gucci’s offices in Milan and Florence in 2017.
Prosecutors in Milan wrapped up their investigation in November, pointing to potential tax evasion by Gucci exceeding 1 billion euros for revenue recorded between 2010 and 2016. The prosecutors argue that profits routed through LGI ought to have been taxed in Italy rather than Switzerland.
If Kering agrees to the settlement, the company would evade additional interest and penalties linked to overdue tax payments, which could have tacked on an extra 500 million euros to the final sum. Gucci’s current CEO Marco Bizzarri and ex-CEO Patrizio Di Marco are currently under scrutiny in connection with the case.
Upon the resolution of the tax dispute, a separate agreement is expected to be brokered alongside the ongoing investigation. Legal representatives for Bizzarri and Di Marco were not immediately available for comment on the matter.
To learn more about Kering and its luxury portfolio, visit Kering website. For additional insights on tax disputes in the fashion industry, check out this informative article from Vogue Business.
