Dolce and Gabbana in court over tax charges

Italian designers Dolce and Gabbana accused of not paying taxes on royalties of about €1bn (£860m) in high profile case

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 paying taxes on royalties of about €1bn (£860m) in one of the few high-profile tax cases to go to court in Italy.

The designers, who count pop singer 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, 54, and Gabbana, 50, were the people who indirectly benefited most from the operation.

“Gado was 80% controlled by D&G srl, which was owned 50% each by Dolce and Gabbana,” Ruta said.

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 €9m (£7.7m) in back taxes while former MotoGP world champion Valentino Rossi agreed to pay €39m to Italy’s tax agency in 2008.

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