Steffano Gabbana and Domenico Dolce are best known as international fashion designers to the rich and celebrities, such as Scarlett Johansson and Naomi Campbell. Now, like their competitor Valentino, they are also known as tax evaders. According to a Milan tax court, in 2004 the two men undervalued their business to avoid paying tax when the business was sold. Agenzia delle Entrate, Italy’s tax authority, held that the two men’s behavior showed a “conduct of abuse with the only goal of obtaining a fiscal advantage.” Dolce and Gabbana were fined 343.3 million euros ($439.70 million U.S.) as restitution. The two men may also now be sent to prison for up to five years in a separate criminal trial related to the same business.
While the sale of the business does not appear to be subject to U.S. taxation, many speculate that the conduct of Dolce & Gabbana may get the IRS to look at the pair’s U.S. dealings.
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