Gucci confirms its offices were raided over suspected tax evasion

gucci gift guide for 2017

Gucci Gift 2017 illustrations; image:


Powered by article titled “Gucci confirms its offices were raided over suspected tax evasion” was written by Angela Giuffrida, for The Guardian on Monday 4th December 2017 15.04 UTC

The Italian fashion house Gucci has confirmed that its offices in Milan and Florence were raided last week over suspected tax evasion.

The company, which is owned by the French luxury group Kering, was forced to issue a statement after the Italian newspaper La Stampa reported on Saturday that police had spent three days searching the offices, including its new Milan headquarters, for evidence amid suspicions that levies on profits made from sales in Italy were instead declared in the more favourable tax regime of Switzerland.

By doing so, prosecutors suspect that the 96-year-old brand, which is enjoying a phenomenal revival, managed to save €1.3bn (£1.1bn) in domestic tax over several years.

The company said it was “providing its full cooperation to the respective authorities and is confident about the correctness and transparency of its operations”.

“The company has a complex group structure, in which the trademark and royalties and a lot of other costs are paid abroad,” Angelo Cremonese, an economics and finance professor at Rome’s Luiss University, said.

“It has a Switzerland entity which the tax authorities suspect is an Italian company for tax purposes.”

Gucci, whose sales growth surged 49.4% in the third quarter of this year, is the latest fashion house to come under the spotlight of the Italian taxman as part of the country’s aim to claw back more than €100bn estimated to be lost to tax fraud each year.

A series of investigations began in 2014, with a probe into Prada’s decade-long tax avoidance totalling €470m being among the most high-profile. Chief executive Miuccia Prada and her husband and joint chief executive Patrizio Bertelli later paid an estimated €420m in a settlement. Giorgio Armani was also forced to pay €270m in 2014 over a tax dispute involving overseas subsidiaries. Meanwhile in the same year, fraud convictions against Domenico Dolce and Stefano Gabbana, the celebrated founders of Dolce & Gabbana who had been facing jail for allegedly avoiding paying €1bn, were overturned.

Since then, tax authorities have homed in on the tech giants, with Apple agreeing to pay a €318m fine in 2015 after its Italy unit allegedly failed to declare taxes totalling €880m between 2008 and 2013. Earlier this year Google settled a €306m tax dispute, while probes into Amazon and Facebook are ongoing.

The investigations are reaping some success, with the Italian Revenue Agency saying in April that it had recovered €19bn in unpaid taxes in 2016, a 28% increase on the €14.9bn retrieved in 2015 and more than triple the €6.4bn recovered a decade ago.

The bulk of the money (€10.5bn) recovered last year came from tax checks conducted by the agency, while the rest came from settlements or spontaneous payments. The government is also preparing to introduce a so-called “web tax” on digital sales, which will hit tech giants and is expected to bring in an extra €114m a year.

Much of the success in recuperating taxes in recent years has been due to voluntary disclosures courtesy of an information sharing-agreement struck between Italy, Switzerland and other tax havens, added Cremonese.

“If people or companies with money abroad don’t make a declaration, then Switzerland and other tax havens let the Italian government know.”

•Follow Guardian Business on Twitter at @BusinessDesk, or sign up to the daily Business Today email here. © Guardian News & Media Limited 2010

Published via the Guardian News Feed plugin for WordPress.