Thursday, June 20, 2013

Dolce, Gabbana get suspended prison for tax evasion, abetted by "we are not a tax haven" Luxembourg

Like all tax havens, Luxembourg routinely denies being one. An official communiqué from Luxembourg for Finance, to mention just one example, goes:
"Contrary to a widely held misconception, Luxembourg is not a tax haven."
They all say that. Denial of tax haven status by tax havens is so routine that we at TJN (informally) take it as a marker for tax haven status.

Now, from the Financial Times:
Italian fashion designers Domenico Dolce and Stefano Gabbana have been handed suspended prison sentences of a year and eight months and fined nearly half a billion euros by a court in Milan for evading millions in taxes.
Apparently they sold their brand to a Luxembourg-based holding company called Gado in 2004 to avoid declaring taxes on over €1 billion in royalties. NBC reports Milan prosecutor Laura Pedio:
Gado is nothing but a shell company that took no administrative or financial decisions, said Pedio. "Gado is a radio relay station," she said. "The orders originated in Milan, and bounced from Luxembourg back to the Milan offices where the decisions regarding the brands were made."
And the Italians know that Luxembourg has serious criminal form in this respect:
"The widespread use by Italian business of holding companies registered in Luxembourg has been a specific target for tax authorities (in) Rome."
Just one more reminder, in case anyone doubted that this wealthy, clean-streeted, pretty European mini-state has the facilitation of criminal activity into a business model.

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