Fashion house Giorgio Armani has paid €270 million (Dh1.36 billion) to Italian tax authorities to settle a dispute over payments from the group’s subsidiaries abroad.
Italy has become more interventionist on taxes during its longest recession since the Second World War, and companies in high-profile sectors such as luxury goods are in the state’s crosshairs.
According to a newspaper report in Italy on Friday, all tax claims against Armani are now closed.
Armani’s peer Prada Holding, which controls Prada, paid a reported €420 million to settle taxes in Italy after completing a process of voluntary disclosure in December.
Italian tax authorities are taking a more aggressive stance against the backdrop of a national debt burden of €2 trillion, with Italy’s central bank estimating that the country could reap €200 billion in unreported taxes. The new disclosure guidelines are attempting to encourage Italian businesses to repatriate from tax havens in the Netherlands, Switzerland and Luxembourg, where family-owned firms have based assets in order to shelter from Italy’s erratic tax system. Diego Della Valle, the entrepreneur behind luxury leather firm Tod’s, recently moved his holding company from Luxembourg to Italy.
However, fashion groups are also viewed as acceptable targets by the state because of the international scope of their businesses, with the Marzotto textile firm and the Bulgari family also the subject of tax investigations.
Few tax cases come to court, with the notable exception of design duo Domenico Dolce and Stefano Gabbana, who were convicted of hiding hundreds of millions of euros from tax authorities. They have appealed against the ruling, which saw them both sentenced to one year and eight months in jail, and the verdict is due on 30 April. Their chances of acquittal rose last month after an Italian prosecutor declared them innocent.
In a pointed reference to their predicament, the first Dolce Gabbana show in the wake of the verdicts featured the use of coins as a motif throughout the collection.