Dolce & Gabbana slapped with fine for tax
evasion
Domenico
Dolce and Stefano Gabbana were accused to have used a Luxembourg shell company,
GADO Sarl, to control their brand and avoid taxes in the order of $450,000.
The
Luxembourg company registration shows the following incorporation on March 3,
2004 and the eventual change back to an Italian corporation on May 10, 2008. (The
tax probe had begun in 2007).
No Reg. de Commerce:
|
B0100017
|
Forme juridique:
|
Société à responsabilité limitée de droit
luxembourgeois
|
Date de constitution:
|
4.3.2004
|
Adresse postale:
|
10, VIA GOLDONI
|
See
also:
What is
the difference between tax avoidance and tax evasion?
In the US, the short
funny answer is: 5 years in jail.
But
briefly, tax avoidance is using all legal means to minimize taxes, however tax
evasion uses illegal means to pay no taxes.
Though
the UK might even distinguish between good and bad tax avoidance, using concepts
such as "artificial avoidance schemes" versus those "using
ordinary sensible tax planning". And there we may find the devil in the
detail, a situation that might also explain that in Italy, in a first court
case the accused were found not guilty, until a "cassation" court
found otherwise. Dolce and Gabbana as it seems will appeal.
For the
observer, there are some unanswered questions:
1. Who
advised D&G in Luxembourg, and brought them into this mess? Was the scheme tested,
supported by fiscal rulings? The 2008 switch back of headquarters to Italy, was that a move to
document good faith, or was it panic?
2. Those
advisers, and indeed the Luxembourg government should be alarmed at the sight
of activist Italian judges, if indeed a legitimate setup in Luxembourg,
implemented according to the rules and regulations and European law, is negated
by courts in other European jurisdictions. If it was not legitimate, which
mistakes have been made, and who is liable?
3. If the whole Luxembourg setup was legitimate, were
the Italian court decisions politically motivated? In which case it would
become a Luxembourg-Italian bilateral issue if not a European one. The end of
the free flow principles? This is one of the legitimate questions where the
Luxembourg government might have to defend its turf, meaning a legitimate financial center, not the tax haven.
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