An Italian court has ordered the Dolce & Gabbana fashion house to pay a fine of €343 million (HK$3.4 billion) plus interest for failing to declare millions of euros in revenue to tax authorities, local media reported.
The international fashion giant, whose celebrity clients include Beyonce and Madonna, plans to appeal the verdict and the payment of any fine would be suspended pending the appeal, reports said.
The company was found to have "violated legislation with the sole objective of procuring a fiscal advantage".
Domenico Dolce and Stefano Gabbana were accused of having transferred control of their brands to a shell company in Luxembourg in 2004 and 2005, thereby avoiding paying Italian taxes of around €420 million.
Prosecutors have argued that setting up the Luxembourg company Gado - an acronym of the surnames of the two designers - while the company was still operating out of Italy, was an attempt to defraud the state.
The pair have repeatedly denied the accusations.
"All that I care about is making clothes, that's all. Let them do and say whatever they want," Gabbana tweeted after Saturday's verdict, which was not publicly announced and was reported in the local press on Sunday.