Luxury conglomerate Kering, renowned for its ownership of prestigious brands like Yves Saint Laurent, Balenciaga, and Gucci, is currently embroiled in a tax fraud investigation that has been ongoing since February 2019. The French financial prosecutor’s office has been looking into allegations of tax evasion practices by Kering, particularly regarding the declaration of profits in Switzerland from activities primarily conducted in Italy. It is believed that Kering managed to evade paying around 2.5 billion euros ($3.0 billion) in taxes between 2010 and 2017 through these practices.
Reports by the Mediapart news agency reveal that Kering had implemented a sophisticated system to bypass tax responsibilities, funneling profits through a logistics center in Lugano, Switzerland, despite the activities being centered in Italy. This strategy enabled Kering to significantly reduce its tax burden in Italy. As a result, the Italian authorities have imposed a hefty tax bill of 1.25 billion euros on Kering related to Gucci’s earnings in 2019, following an investigation that commenced in late 2017.
Kering strongly refutes these accusations and asserts that they are unfounded. The luxury group has assured its full cooperation with financial authorities during the ongoing investigation. However, this is not the first time Kering has faced scrutiny over its financial practices. In 2019, the Milan prosecutor’s office initiated an investigation that uncovered similar tax evasion tactics employed by Kering, particularly in connection with the Gucci division.
Mediapart’s investigations suggest that Kering extended this tax avoidance scheme to its other luxury labels, such as Balenciaga and Yves Saint Laurent, excluding jewelry. Through a secretive tax agreement with the Swiss canton of Tessin, Kering allegedly paid a mere 8.0 percent tax on profits from its Swiss operations, in contrast to the 33 percent tax rate in France.
The probe unveiled that Kering potentially evaded substantial amounts in taxes, with Yves Saint Laurent alone reportedly avoiding 180 million euros. Despite Kering’s continuous denial of any wrongdoing, the accusations of tax fraud have sparked concerns about the financial conduct of this high-end conglomerate. As the investigation progresses, attention is focused on Kering and its senior leadership to uphold transparency and adhere to tax regulations.
For more information about this ongoing investigation and the allegations against Kering, you can visit the official website of the French financial prosecutor’s office here. Additionally, detailed reports and coverage on this issue can be found on the Mediapart news agency’s website here.
