Dolce and Gabbana get suspended jail terms for tax evasion

Fashion icons who dress the stars evaded tax by hiding €1 billion from officials, judge rules

PUBLISHED : Thursday, 20 June, 2013, 12:00am
UPDATED : Thursday, 20 June, 2013, 1:47am

Fashion design duo Domenico Dolce and Stefano Gabbana were yesterday each handed a suspended prison sentence of one year and eight months for hiding hundreds of millions of euros from the tax authorities.

The designers, who are nearly as famous as the stars they dress, were not present in court in Milan and denied the charges.

Given the complexity and length of the appeals process, they are unlikely to spend any time in jail. Public prosecutor Gaetano Ruta had asked that they be jailed for two- and-a-half years. A spokesman for the company declined to comment immediately.

The success of Dolce and Gabbana's sexy corset dresses and sharply tailored suits favoured by celebrities such as Kylie Minogue, Kate Moss and Bryan Ferry have earned them a glamorous lifestyle.

They hosted a party for their friend and client Madonna on her birthday in 2009 at their villa perched above the chic boating resort of Portofino. The case dates back to an investigation that began in 2008, when authorities unleashed a tax avoidance crackdown as the financial crisis began to bite. But the probe that ensnared the two designers is one of the few high-profile cases to come to trial so far.

The judge yesterday ruled that the pair sold their brand to Luxembourg-based holding company Gado in 2004 to avoid declaring taxes on royalties of about €1 billion (HK$10.4 billion)

The pair's flamboyant designs are inspired by the sultry southern Italian island of Sicily, where Dolce was born in 1958.

He met Gabbana, now 50, in the latter's home town of Milan, where they showed their first collection in 1985. The brand took hold internationally in the 1990s and global revenues hit just under €1.5 billion in 2011.

The pair have always said they are innocent. "Everyone knows that we haven't done anything," Gabbana tweeted in June last year after the trial was ordered. But Gabbana's only reaction so far yesterday was to tweet a close-up photo of the branch of a colourful citrus tree just seconds after the verdict.