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Jail time sought for Dolce, Gabbana in tax-evasion case

Italian fashion designers Domenico Dolce and Stefano Gabbana face possible jail sentences for alleged tax evasion.

Top Italian fashion designers Domenico Dolce and Stefano Gabbana should be jailed for two and a half years for alleged tax evasion, a Milan prosecutor said on Wednesday.

Dolce and Gabbana are accused of not declaring taxes on royalties of about $1.35 billion in one of the few high-profile tax cases to go to court in Italy.

The designers, who count pop singers Kylie Minogue, Madonna and model Naomi Campbell among their clients and draw inspiration from Italy’s “sweet life” style of the 1950s, have denied the charges.

Prosecutors say the two sold the D&G and Dolce&Gabbana brands to shell company Gado, set up in 2004 in Luxembourg, to avoid paying taxes in Italy where corporate tax rates are some of the highest in the world.

Prosecutor Gaetano Ruta said on Wednesday Dolce and Gabbana were the people who “indirectly” benefited most from the operation.

Italy’s last government launched a clampdown on tax dodgers that featured highly-publicised police raids on wealthy individuals, and across Europe and beyond governments are chasing businesses to pay fair returns on their profits.

Previous tax cases involving celebrities in Italy have led to out-of-court settlements.

In 2000 the late opera singer Luciano Pavarotti paid more than $12 million in back taxes while former MotoGP world champion Valentino Rossi agreed to pay $51 million to Italy’s tax agency in 2008.