Dolce & Gabbana In Some Deep Legal Doo-Doo

Italian luxury label Dolce & Gabbana is facing some serious legal trouble after being formally accused of tax evasion. And according to the charges, this isn’t a discrepancy of just a few million, but more like a debt of $1 billion. While the designers claim innocence, there’s definitely something fishy with the case. In 2004, the company essentially sold itself to itself (if that’s even possible)—the sale was to the designers’ own Luxembourg holding firm called Gado Srl. (Also: Luxembourg, while not #1 on the tax haven list, still has been a country suspect of its banking policies.) The Italian government is claiming that the price D&G named for their company, $447.8 million, was a purposeful underestimate and that the market price should have been closer to $1.37 billion. Higher selling price, higher taxes. The two designers claim this is ridiculous as they shouldn’t be paying taxes on money not actually spent.

An interesting conundrum for sure. We wonder how the courts will rule. [Stylebistro]