default-output-block.skip-main
BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

Farfetch Faces Tax Scrutiny in Italy

The online luxury giant said Italian authorities were ‘reviewing’ transfer pricing at an unnamed subsidiary. Its Italian holdings include Off-White operator New Guards Group, Palm Angels and Farfetch Italia.
A shot of the Farfetch logo on a white background with blurred images of models in the background.
Farfetch expects to spend up to $170 million on one of its main sales growth driver in 2023. (Shutterstock)

Luxury e-commerce and streetwear giant Farfetch is facing a “review” by Italian tax authorities at one of its subsidiaries in the country, the company disclosed in its annual report Friday.

Farfetch’s Italian subsidiaries include New Guards Group, the luxury streetwear outfit that operates Off-White and Ambush, as well as Farfetch’s Italia division and Palm Angels, the label in which it acquired a controlling stake last November.

”Italian authorities are currently reviewing the activities of one of our subsidiaries for the years 2015 through 2020, including whether that subsidiary had a permanent establishment in Italy and our transfer pricing policies,” Farfetch said in the report.

Both New Guards Group and Palm Angels were founded in 2015. Farfetch declined to comment on which unit or units were concerned by the inquiry.

Italian authorities have cracked down in recent years on fashion companies who allegedly reduced their taxes and social charges by paying salaries and funnelling revenues through lower-tax jurisdictions.

In 2019, Kering paid $1.5 billion in a settlement over its alleged use of a logistics centre in Ticino, Switzerland, to reduce the taxes of its flagship brand Gucci. Dolce & Gabbana faced a drawn-out court battle over payments to a Luxembourg subsidiary, while Bulgari faced an inquiry over its use of an Irish subsidiary in the years leading up to its sale to LVMH.

Kering and Tom Ford are among the brands to have ceased operations in the low-tax Swiss canton of Ticino, long dubbed “Fashion Valley.”

European governments have recently made a priority of pushing tech giants to pay more taxes locally as well.

Further Reading

On the heels of its first profitable year, the luxury platform is continuing on with a multi-pronged strategy to gain more market share, from a potential YNAP deal to a hundred-million-plus opportunity with Reebok.




In This Article
Topics
Organisations
Tags

© 2022 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from Luxury
How rapid change is reshaping the tradition-soaked luxury sector in Europe and beyond.

This week LVMH will report results, and executives may offer clues about its megabrands’ next steps under new leadership. That plus what else to watch for this week.



From Prada to Dior, fashion’s embrace of Korean pop stars is going into overdrive as brands look to Asian consumers to fuel growth.


view more

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
CONNECT WITH US ON
How to Build a Profitable DTC Brand
© 2023 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions and Privacy policy.
How to Build a Profitable DTC Brand