Skip to main content
BoF Logo

The Business of Fashion

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

Kering Faces €1.4 Billion Italian Tax Claim

Some business carried out by Kering employees in locations including Milan and Paris was billed through a Swiss unit, incurring lower tax rates, according to reports.
By
  • Reuters

MILAN, Italy — Kering is facing an Italian claim for €1.4 billion ($1.6 billion) in unpaid taxes, the French luxury goods group disclosed on Friday, adding that it contested the preliminary findings.

The company's Swiss-based Luxury Goods International (LGI) subsidiary has been under investigation for allegedly avoiding tax on earnings generated elsewhere.

The probe has largely centred on Gucci, Kering's star brand and biggest revenue driver. Italy's tax police carried out checks at Gucci's Florence headquarters and Milan offices in 2017, and drew up the report that has now been handed to Kering, a source close to the investigation said.

Kering has consistently denied avoiding tax, saying its activities were fully compliant with all tax obligations.

ADVERTISEMENT

In its statement on Friday, the group said the Italian tax authorities' findings for the years 2011-2017 had yet to be finalised by their own enforcement team.

"Kering challenges the outcome of the audit report both on the grounds and the amount," the company said, adding that it "does not have the necessary information" to record a provision against any potential bill for back taxes or penalties.

The company has said that LGI is a substantial firm in its own right, with 600 employees handling inventory, billing and supply-chain logistics, with a business model "known to French and other competent tax authorities".

According to reports by France's Mediapart newspaper and Germany's Der Spiegel, Kering's wholesale activities - the sale of products to retailers such as department stores - have come under particular scrutiny.

Some business carried out by Kering employees in locations including Milan and Paris was billed through the Swiss unit, incurring lower tax rates, according to those reports.

Reuters reported in November that Milan prosecutors were wrapping up their tax probe into Gucci and Kering, which could potentially lead to a trial.

Kering is due to report full-year results on Feb. 12.

By Sarah White and Emilio Parodi; Editor: Laurence Frost

In This Article
Organisations
Location
Tags

© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from Financial Markets
A financial lens on the fast-changing fashion sector, including markets, investors and deals.

The Best of BoF 2023: Diversity’s Litmus Test

In 2020, like many companies, the $50 billion yoga apparel brand created a new department to improve internal diversity and inclusion, and to create a more equitable playing field for minorities. In interviews with BoF, 14 current and former employees said things only got worse.


The Year Ahead: The Future of Fashion Deal-Making

For fashion’s private market investors, deal-making may provide less-than-ideal returns and raise questions about the long-term value creation opportunities across parts of the fashion industry, reports The State of Fashion 2024.


The Investment Giant Behind Some of Fashion’s Biggest Deals

L Catterton, the private-equity firm with close ties to LVMH and Bernard Arnault that’s preparing to take Birkenstock public, has become an investment giant in the consumer-goods space, with stakes in companies selling everything from fashion to pet food to tacos.


view more

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
CONNECT WITH US ON
© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.