Italian fashion designers Domenico Dolce and Stefano Gabbana, founders of the eponymous Dolce & Gabbana luxury fashion label, were sentenced to 20 months in prison for tax avoidance yesterday by Italy’s high court. The timing of the sentence comes just a day after the conclusion the 39th G8 Summit where global corporate tax evasion and avoidance featured heavily on the agenda.
An investigation launched by Italian authorities concluded that the former couple intentionally evaded paying some 1 billion euros ($1.3 billion) in income tax on royalties earned from 2004. The pair had sold their brand to a Luxembourg-based holding company that they had secretly set up called Gado (a play on their two surnames) for well under the market value price of the company.
Dolce and Gabbana met in the early 80s and showed their first collection in Milan in 1985. Their brand has since grown to become one of Italy’s largest corporations and revenues are estimated to exceed 500 million euros ($661 million) a year.
The pair was previously cleared of the charges in a trial back in 2011, but the Italian courts retried and have now won. Domenico Dolce and Stefano Gabbana's jail sentence has been suspended pending their appeal. Debate rages in Italy as to whether or not either of them will see the inside of a jail cell. Some argue that their economic contributions will mean a slap on the wrist in exchanged for a back taxes and penalty fines, while others argue that an example will be made of the pair.