Dolce and Gabbana is one of the leading fashion houses in the world. Well, maybe not for long. The company faces a potential 480 million euro tax evasion charge. 

Tax evasion is back in the news these days in a big way. Why? Have people and businesses started trying to evade taxes in new and intriguing ways? Nope. They have always been doing this and that. Instead, the reason we are seeing an onslaught of these cases is governments need money in a big way. Italy is one of these countries and it is not just going after individuals. 

Dolce and Gabbana is a huge fashion house. Created in 1985, it has grown from a small niche store into a fashion powerhouse. The brand is known world wide and the company maintains well over 100 high end stores while employing over 3,000 people. All and all, the company is considered a smashing success by just about any measure, which apparently made Italian tax authorities wonder why they weren’t seeing more tax revenue from it. 

It turns out that the powers that be at Dolce and Gabbana realized they needed a tax strategy to save money. That strategy apparently involved creating Luxemburg companies and moving the brand to them. In doing so, the company thought it would avoid paying Italian taxes. After all, the business was no longer positioned there. 

Italian tax authorities have taken a different view. They assert that while the Luxemburg companies own the brand, the actual work being done never left Italy. Instead, the designers and employees are all still working in Gado, Italy. Given this, the tax authorities view the business as being in Italian jurisdiction and, as such, taxes must be paid. 

So, what kind of tax bill are we talking here? How about over 480 million euros! That’s a huge bill, one the company almost surely can’t pay. Where will it all end up? It is hard to say, but it is a common tax dispute in practically every country. Perhaps it will be settled with some tax authorities becoming very well dressed!