The Italian tax authorities are opening an investigation into tax evasion among the top management of Gucci, the Italian subsidiary of luxury holding company Kering. More than twelve (former) managers are under investigation.
Both in Switzerland and Italy
Gucci is said to have evaded taxes between 2011 and 2017 by channelling Italian sales through a German logistics centre. Parent holding Kering reached a settlement with the Italian tax authorities and paid 1.25 billion in May for the charges to be dropped.
However, the investigation is continuing and the tax authorities are now turning their attention to the individual managers at the fashion house during that period: they would have been paid a part of their salary in Switzerland, despite not working in the country at all. Instead, they were working at the head office in Milan.
According to confidential sources, this would mean that managers were able to pay tens of millions less in taxes, reports Bloomberg. According to these sources, the managers were directly involved in the decision to allow more than 80 million salaries to go through Luxury Goods Services, a company in Switzerland, and a company in Luxembourg.
A blemish on the Kering brand
This investigation could have severe consequences, not just for the managers themselves, but also for parent holding Kering: at Gucci, wage negotiations for the top managers were sometimes conducted on the basis of their ‘after-tax’ salary. If they still have to pay fines or overdue taxes, some of them may demandi compensation from the company.
Moreover, the news casts a dark shadow over the image of the luxury holding, which aims to present itself as a champion of ethics and sustainability in the luxury sector. Kering strongly denies that there are any new charges. Indeed, Bloomberg’s inside sources confirm that the investigation is still at an early stage.
