Tax officials in Italy have accused Domenico Dolce and Stefano Gabbana of tax evasion and could fine them $1.12 billion. Basically, the police say Dolce and Gabbana did not pay enough for the sale of the Dolce & Gabbana and D&G brands to their Luxembourg-based holding company Gado Srl in 2004. The designers say they only received $447.8 million in that deal, and properly declared financial figures of the transaction to authorities. They say police calculated the market value of the transaction to be $1.37 billion — way more than it actually was, according to Dolce and Gabbana — and therefore assume the designers owe more taxes than they actually paid. It is the second giant tax mess for the Dolce boys related to Gado. Police also think the company was set up in Luxembourg for the purpose of avoiding Italian taxes. Dolce and Gabbana say they’re prepared to vigorously defend themselves, which should be great fun. It only took Roberto Cavalli six years to clear up his tax evasion charges in Italy.
