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Prada Appears To Follow Italy's Latest Fashion Trend: Tax Transfers, Allegations Of Evasion

Jan 11 2014, 8:11pm CST | by

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Prada Appears To Follow Italy's Latest Fashion Trend: Tax Transfers, Allegations Of Evasion
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Prada Appears To Follow Italy's Latest Fashion Trend: Tax Transfers, Allegations Of Evasion

Clearly, the fashion gods are angry.

Last year, Italian tax authorities took on the fashion house of Dolce & Gabbana, eventually title="Dolce & Gabbana Fined Millions For Tax Evasion">imposing a fine of 343.3 million euros ($439.70 million U.S.) as restitution for allegations of evading taxes by selling their brand to a Luxembourg-based holding company that they controlled. In addition to the fines, Domenico Dolce and Stefano Gabbana were charged criminally on charges related to the same allegations. At trial in June, the pair was found guilty of tax evasion and sentenced to one year and eight months in prison . The sentencing followed a lengthy inquiry into the pair’s financial affairs by Italian tax authorities.

Now, tax authorities have turned their sights on another Italian fashion staple: designer Miuccia Prada. Prada and her husband, Prada chief executive Patrizio Bertelli, are allegedly under investigation in Milan on charges of tax evasion. Their accountant, Marco Salomoni, is also said to be under the microscope.

The charges are as familiar as last year’s fall line: tax authorities claim that the company avoided nearly £400 million ($658.92 million U.S.) by the use of a series of transfers. And where did the company allegedly park their money? Prada Holding, a controlling shareholder of the company, set up shop in the Netherlands and Luxembourg in order to lessen the company’s tax bite.

While the company has not commented publicly on the specifics of the latest allegations, there have been whispers of wrongdoing for months. In 2013, the company made comments about their overall tax strategy, acknowledging that significant assets were out of the country. Last month , as part of what it termed a “voluntary tax disclosure,” Prada Holding reported that it planned to repatriate a significant amount of its assets to Italy. The company also paid an unconfirmed amount – said to be in the $500 million range – to Italian tax authorities as part of an alleged settlement.

At the helm of the company is 64 year old Miuccia Prada, the youngest granddaughter of Mario Prada, who originally founded the company. She holds a PhD in political science (and trained as a mime – I kid you not) but has spent most of her adult life in the fashion world. She took quickly to design, introducing her own collection in 1988. Her more affordable, ready to wear line, Miu Miu, hit the market in 1992.

Today, you can find Prada in 250 stores in 65 countries selling handbags, shoes, clothing and fragrances – of course, finding and affording it are two totally different things. The luxe brand is synonymous with fashion and wealth and happily for Prada, continues to expand. Growth has meant big dollars for Prada and her husband: Miuccia Prada was on Forbes’ list of 2013 Billionaires as one of the World’s Richest Women with an estimated net value of $12.4 billion.

These latest tax allegations might not be the kind of press Prada wants but they might do well to take a page from Dolce & Gabbana’s playbook. The pair is still beloved in Italy with customers tweeting and voicing support for the duo, despite their conviction. As for Prada? The company and Miuccia Prada have, through their spokespersons, denied any wrongdoing.

Want more taxgirl goodness? Pick your poison: You can receive posts by email , follow me on twitter (@taxgirl ) hang out with me on Facebook and check out my YouTube channel . You can also subscribe to the podcast on the site or via iTunes (it’s free).

Source: Forbes

 

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