December 3, 2012 / 2:41 PM / 7 years ago

Italian designers Dolce & Gabbana tax trial kicks off

MILAN (Reuters) - Fashion designers Domenico Dolce and Stefano Gabbana, who count pop star Madonna and model Naomi Campbell among their clients, went on trial on Monday for alleged tax evasion in one of the most prominent tax cases involving celebrities in Italy.

The case is one of the few high-profile tax disputes to go to court in Italy, where the government of Mario Monti has launched a clampdown on tax dodgers that has included highly-publicized police raids in yacht marinas and chic ski resorts.

The designers, who deny any wrongdoing and did not attend the hearing on Monday, stand accused of not declaring taxes in Italy on royalties of around 1 billion euros ($1.3 billion).

Prosecutor Laura Pedio alleges the duo sold their D&G and Dolce & Gabbana brands to a holding company they set up in Luxembourg in 2004 in order to avoid paying taxes in Italy, where corporate tax rates are among the world’s highest.

The two Italian business partners had been cleared from accusations of tax cheating by a previous Milan court last year. But a higher court overturned the acquittal, paving the way for the trial.

The designers, who draw inspiration from Sicily’s and Italy’s “sweet life” style of the 1950s, have kept a low profile on the case after Gabbana lashed out at the high court’s decision last year, saying on Twitter he could leave the country.

“Everyone knows that we haven’t done anything,” Gabbana said in a tweet in June when the Milan court ordered the trial.

Six other people, including a tax consultant, also face trial. If found guilty, they risk a sentence of up to five years in prison.

At Monday’s hearing, a lawyer for Dolce and Gabbana asked the court to annul the trial on grounds of alleged irregularities in the notification of court proceedings.

The court will decide on the request on December 14.

The designers did not comment on the case on Monday and their lawyer was not immediately reachable for a comment.

Previous tax cases involving celebrities in Italy have led to out-of-court settlements, agreements that avoid long legal proceedings and possibly harsher punishments.

In 2000, the late tenor Luciano Pavarotti paid more than $12 million in back taxes when he settled a four-year dispute.

Argentine soccer great Diego Maradona owes some 38 million euros in unpaid taxes to Italian authorities, according to media reports. He has said he wanted to clear up his situation.

Former MotoGP world champion Valentino Rossi agreed to pay $51 million to Italy’s tax agency in 2008 after a lengthy probe.

Reporting by Manuela D'Alessandro and Antonella Ciancio; Editing by Lisa Jucca and Mark Potter

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