The French luxury goods group Kering SA is facing an Italian claim for €1.4 billion ($1.60 billion) in unpaid taxes, as per a Reuters report. The investigation is targeted at Kering’s Swiss-based Luxury Goods International (LGI) subsidiary, for allegedly avoiding tax on earnings generated else where. The probe has largely centered on Gucci, Kering’s star brand and biggest revenue driver. Reportedly, 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.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.
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 Media part newspaper and Germany’s Der Spiegel, Kering’s wholesale activities have come under particular scrutiny.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 February 12.
Headed by Francois-Henri Pinault, Kering S.A. owns luxury brands Gucci, Yves Saint Laurent, Balenciaga, Alexander McQueen, Bottega Veneta, Boucheron and Brioni, Pomellato.