Dolce and Gabbana Are in Some Serious Trouble for Alleged Tax Evasion

Fashion super friends and purveyors of racist earrings Domenico Dolce and Stefano Gabbana have run into a bit of tax trouble in Italy, one of Europe’s leakiest economies. The famous pair are accused of evading more than €400 million in Italian taxes when they sold their D&G and Dolce & Gabbana brands to a holding company called Gado, which they established in Luxembourg back in 2004 allegedly in order to take advantage of the tiny banking country’s relatively low tax rate.

Dolce and Gabbana, whose client list include such sartorial luminaries such Angelina Jolie, Scarlett Johansson, Monica Bellucci, and Naomi Campbell, will embark on a pretty epic tax trial on Monday, when prosecutors in Milan will try to untangle a complicated tax evasion system and show that the D&G companies were sold for €300 million, which, according to investigators, was a mere third of their true market value. For their part, Dolce and Gabbana have steadfastly denied any wrongdoing, claiming that the charges are based “a completely abstract calculation” of their companies’ value at the time. Six associates of the fashion team (including their tax consultant) will also stand trial, and the duo could a sentence of up to five years if they’re found guilty.

Under the anything-goes administration of former Italian prime minister Silvio Berlusconi, Dolce and Gabbana might not have found themselves in such a tight spot, but the Italian economy is bottoming-out, the easy-breezy reign of Berlusconi is over, and Italy’s new bossman, Mario Monti, has taken a hard rhetorical line on tax evasion, which the Telegraph notes with desiccated British sarcasm is something of a “national sport.” Zing, pause for a sip of tea and some biscuit, continue. Monti has declared “war” on tax evaders, and with good reason: though taxes in Italy are quite high, tax dodging is often so successful that it costs the county some €115 billion in revenue each year. A high-profile case like the one against Dolce and Gabbana, if it’s successful, would definitely show Italian tax dodgers that the bunga bunga is over.

Dolce and Gabbana: stylists to the stars face £320 million tax fraud case [Telegraph]