Dolce & Gabbana Stand a Two Year Jail Sentence in Tax Evasion Trial

In the ongoing tax evasion trial of designers Domenico Dolce and Stefano Gabbana, Prosecutor Gaetano Ruta called for a stringent 2½ year jail sentence for the designers during his closing arguments. Ruta also called for D&G board member Cristiana Ruella to receive the same judgment.

Dolce and Gabbana, along with several of their business associates, are currently on trial in Milan for tax evasion to the tune of €420 million. The case stems from the 2004 sale of Dolce & Gabbana and the diffusion line D&G to a holding company based in Luxembourg that is also owned by the designers. Italian authorities allege that the holding company is merely a strategy for Dolce & Gabbana to avoid paying higher corporate taxes.

Their legal saga has dragged on for years—in 2010 they were indicted for tax evasion, but later that year the charges were dropped. Then in 2011, Italy’s Supreme Court re-opened the case after a prosecutorial appeal, and the trial began in early 2013. This March, the Italian Tax Commission ordered Dolce & Gabbana to pay a fine of €343 million plus interest in a proceeding separate from the criminal trial, although related to the same matter.

While tax evasion has been something of a norm in Italy, last year it drained the Italian economy of an estimated €285 billion, so it’s no surprise that the designers’ legal proceedings are being closely watched. Dolce and Gabbana have firmly denied any wrongdoing.