Gucci owner Kering settles Italy tax fraud case with 1.25b euros

[PARIS] French fashion conglomerate Kering, owner of Gucci, said Thursday it had agreed to pay Italian authorities 1.25 billion euros (S$1.9 billion) to settle a tax fraud case involving its Swiss subsidiary.

The Milan public prosecutor had been probing the luxury goods company, which also owns Saint Laurent, Balenciaga and other high-end brands, over allegations that it declared several years' worth of Italian sales in Switzerland, thereby saving around 1.3 billion euros in domestic tax.

The settlement falls short of a 1.4 billion euro estimate given by Italian tax authorities in January.

According to Italian media the probe, launched in 2017, was based on information from a former senior Gucci employee and involved extensive searches of Gucci offices.

"Kering announces that the Group has concluded today a settlement with the Italian Revenue Agency," the group said Thursday.

It added that the settlement came "after in-depth analysis and with a collaborative spirit".

It involves the payment of 897 million euros in back taxes, plus penalties and interest.

Kering said the payment would impact its 2019 financial results with an additional tax charge of 600 million euros, and an outflow of 1.25 billion euros in the cash flow statement.

French news website Mediapart in March claimed that Kering had been evading tax amounting to a total of 2.5 billion euros since 2002, mostly in Italy but also in France and Britain.

AFP