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Swiss subsidiary Gucci parent Kering agrees huge settlement over Italian taxes

View of the Luxury Goods International subsidiary of the Kering Group in St. Antonino

View of the Luxury Goods International subsidiary of the Kering Group in St. Antonino near Bellinzona in canton Ticino

(Keystone / Samuel Golay)

French luxury group Kering, owner of the Gucci brand, has agreed to pay €1.25 billion (CHF1.42 billion) to settle a dispute with the Italian tax authorities over its Swiss subsidiary Luxury Goods International.

Kering, which has denied avoiding tax, said on Thursdayexternal link the settlement would involve the payment of €897 million in additional taxes, along with further payment for penalties and interest. The total required payment amounts to €1.25 billion.

Tax authorities accused Gucci of evading taxes on more than €1 billion in revenues between 2011 and 2017. Its offices in Milan and Florence were raided by Italian police in late 2017.

Gucci revenues were booked through Kering’s Swiss-based subsidiary Luxury Goods International and Italian prosecutors argued that tax should therefore have been paid in Italy, not Switzerland.

Kering said that it acknowledged prosecutors’ claim that Gucci had a “permanent establishment” in Italy during the period under scrutiny.

Gucci Chief Executive Marco Bizzarri and former CEO Patrizio Di Marco remain under investigation in the case, “in their capacity as legal representatives of the company”, Kering told Reuters on Thursday.

It added that it was “confident that the situation regarding the criminal investigation will be clarified”. 

Kering recorded €13.7 billion in sales last year, of which Gucci accounted for about 60%.

Luxury investigation Swiss open criminal probe in Kering tax case

Swiss public prosecutors have opened a criminal investigation into a tax case involving an ex-manager of French luxury group Kering.

This content was published on March 22, 2018 2:58 PM

Reuters/FT/sb

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