Image: Gucci

Gucci is likely to stand trial in connection with an allege multi-billion-dollar scheme to avoid paying taxes, Reuters reported on Tuesday, citing a “judicial source.” Prosecutors in Milan have reportedly wrapped up the probe into charges of corporate tax evasion that saw them raid the Italian design house’s Milan and Florence offices in December 2017, thereby “paving the way for a formal request for a trial.” The publication notes that “the case will be sent to court unless in the next 20 days the parties agree on a settlement, or new evidence emerges.”

Gucci and its parent company, Paris-based conglomerate Kering, first made headlines in early December when it was revealed that they were at the center of an ongoing investigation involving Italian financial police. Gucci’s current and former CEOs, Marco Bizzarri and Patrizio Di Marco are also said to be under investigation in the case.

WWD reported late last year that “the money in question involves revenues from activities that were registered in Lugano, Switzerland, but which would have been linked to the work of managers formally based in Lugano, where companies tend to be subjected to a more favorable tax regimen than in Italy, but actually working in Milan.”

French publication Mediapart and Germany’s Der Spiegel reported this spring that Gucci has failed to pay 2.5 billion euros ($3.1 billion) in taxes in Italy and France since 2002 “by attributing wholesale revenues from brands including Gucci and Yves Saint Laurent to its LGI logistics center in Cadempino, Switzerland, thereby benefiting from a lower local tax rate.” The international newspapers revealed in March that the Italian tax investigation may implicate other brands, including fellow Kering-owned label, Yves Saint Laurent. (As of this week, Reuters is reporting that Milan prosecutors cited a $1.13 billion figure for the years between 2010 and 2016).

In response, Kering’s chief financial officer Jean-Marc Duplaix called these figures little more than “guesswork on the part of journalists.”

Gucci and the François-Henri Pinault-chaired Kering announced in January that they are in compliance with Swiss tax laws, and Kering “has implemented a governance that aspires to ensure full compliance with tax regulations at all levels, including its employees.” In regards to CEO Marco Bizarri, the French giant asserted that “he is fully compliant with his tax obligations in Italy, where he is tax resident.”

In a subsequent statement this spring, Kering stated, “The group pays its due taxes in Switzerland, in compliance with the law and the fiscal status of the company. This business operating model is known by French and other competent tax authorities.”

Just this week, a spokesman for Kering revealed that the group “is “cooperating with Italian authorities” and that it “is confident about the correctness and transparency of its operating mode, and is cooperating actively with the competent authorities.”