An Italian court today sentenced fashion house duo Dolce & Gabbana to one year and eight months in prison for tax evasion of around USD 1.33 billion, according to media reports.
Lawyers for Dolce and Gabbana, whose celebrity clients include Beyonce and Madonna, immediately said they will be appealing, and under Italian law the sentence will be suspended in the meantime.
Domenico Dolce and Stefano Gabbana were accused of having transferred control of their brands to a shell company in Luxembourg in 2004 and 2005 to avoid paying Italian taxes.
Prosecutors had argued that setting up the Luxembourg company Gado -- an acronym of the surnames of the two designers -- while the company was operating out of Italy was a bid to defraud the state.
In her closing speech, prosecutor Laura Pedio said there was "rock-solid proof" that the duo had committed "sophisticated tax fraud".
She said Gado was "a sort of cloud with the consistency of gas," while fellow prosecutor Gaetano Ruta said it was "an artificial construction the aim of which was to get a tax advantage".
Investigators completed a probe into the designers, as well as five other people, in 2010 and the case was dismissed in April 2011 but reopened in November last year and went to trial.
Founded in 1985, Dolce & Gabbana employs more than 3,000 people and has 250 shops in 40 countries around the world.
