Let’s be quite clear, the convoluted and considerably less transparent appeals process in Italy nearly guarantees that neither Domenico Dolce, nor Stefano Gabbana will ever see a day in jail. The Milano fashionistas and Milan mainstays were however, sentenced to 1 year and 8 months in jail today. While the prosecutor called for two and a half years, the judge gave them a suspended sentence.
Founded in 1985, Dolce and Gabbana employs more than 3,000 people and has 250 shops in 40 countries around the world. They are known for their sleek mens’ suits such as the ones worn by Bryan Ferry, and their corseted dresses preferred by celebrities like Madonna, Kylie Minogue, and Beyonce.
The two were found guilty of failing to declare 200 million euros ($268 million) through a Luxembourg company to authorities. They were ordered to pay a penalty of 500,000 euros (about $670,000) to tax authorities. While perhaps a touch of an overstatement, nobody pays taxes in Italy and it wouldn’t come as a tremendous surprise to learn that the judge herself hasn’t been completely honest with her own taxes.
Dolce & Gabbana Ruling Could Represent a Year’s Revenue
The judge on Wednesday ruled that the pair sold their brand to Luxembourg-based holding company Gado in 2004 to avoid declaring taxes on royalties of about 1 billion euros ($1.3 billion). That essentially represents a year’s revenue for the fashion giant, which creates its designs based on the island of Sicily where Dolce was born in 1958.
This is not the first time that the couple have been accused of tax fraud. Following the global crisis of 2008, Italy has been searching for recompense to the state, a state that is not that far from becoming the next Cyprus, or Greece.
Three other defendants, including two managers, were also convicted in the scheme and given suspended sentences of one year and four months. A sixth defendant was acquitted.
Dolce & Gabbana Maintain Their Innocence
The two, not unlike most defendants everywhere, have always maintained their innocence. “Everyone knows that we haven’t done anything,” Gabbana tweeted in June 2012 after the trial was ordered. Today, shortly after the verdict, Gabbana’s Twitter activity was limited to a close-up of a colorful citrus tree branch. Undoubtedly, some Italian thing.
The company made no immediate statement following the verdict. Perhaps they are saving their remarks for the next time the duo finds itself in front of a judge.