Dolce & Gabbana Cleared of Tax Evasion Charges

Italian designers Stefano Gabbana and Domenico Dolce were ruled not guilty of tax evasion by Italy’s highest court. The case is interesting for several reasons, including its high-profile principals. It might also be useful to soccer superstar Lionel Messi in his tax case in Spain. Tax attorney Rob Wood discusses the D&G case in this report and in his Forbes article “Dolce & Gabbana Cleared Of Tax Evasion, Could Help Lionel Messi Trial.”

Rob Wood

Rob Wood

Wood explains that, in the Dolce & Gabbana case, the designers were found guilty of tax evasion and given 18-month sentences. An appellate court affirmed the case but reduced the sentences. Ultimately, the highest court reversed the criminal conviction. Of course, Wood notes, the Italian government will collect €343 million in fines and restitution.

The D&G case involved the sale of the Dolce & Gabbana company to a Luxembourg company. There were lawyers and advisors involved in the sale, “setting up entities . . . that could be called shell companies.” In the D&G case, the lawyers were able to persuade the highest court that the principals had not willfully tried to evade taxes. They were trying to save taxes, but all within the law as they understood it.

Wood believes that the arguments in the Dolce & Gabbana case “were compelling” and would be equally applicable to Lionel Messi’s case. Wood says he has read nothing to suggest that Messi himself did anything wrong. It may be that Wesley Snipes was also “led down the primrose path” by advisors and did not himself have any evil intent. Jail time is often a bad idea in situations like these.

Wood says that clearing one’s name is an important issue for people who are in the spotlight and whose success depends on their reputation.

For more information on the subject, please refer to Mr. Wood’s article in Forbes. Robert Wood is a tax attorney with Wood, LLP in San Francisco, California and spoke with The Tax Law Channel, an affiliate of The Legal Broadcast Network.  The Legal Broadcast Network is a featured network of the Sequence Media Group.

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