Gucci Execs Probed Amid Widening Tax Evasion Scandal

Gucci’s tax payments are back in the spotlight.

Italian authorities are investigating more than a dozen current and former executives of the luxury label, according to a report Tuesday from Bloomberg.

Gucci’s headquarters in Florence and Milan were audited in 2017 amid allegations that the brand fed revenue through Switzerland to avoid paying Italy’s higher tax rates. The investigation appeared to reach a conclusion in May when Gucci parent Kering handed over 1.25 billion euros ($1.4 billion) in unpaid taxes — but that didn’t mark the end of the fallout.

The Italian government has widened its probe and is now investigating individual managers’ pay from 2011 to 2017. According to Bloomberg, those executives could owe tens of millions of dollars in back taxes. The report adds that the investigation is in its early stages, with no criminal inquiries opened at present.

The ongoing tax scandal has coincided with a Gucci turnaround, marked by a sales resurgence after Alessandro Michele took over as creative director in 2015. In Kering’s latest earnings report, for Q2, the luxury conglomerate reported a 15.9% sales increase, with Gucci’s revenues jumping 12.7% on a comparable basis.

Gucci made headlines earlier this month when it announced a commitment to 100% carbon neutrality through its supply chain and operations. It also put on a fully carbon-neutral show this month at Milan Fashion Week spring ’20.

The runway show, however, drew some negative press — as model Ayesha Tan-Jones staged a protest against the label’s decision to “use the imagery of straight jackets [sic] and outfits alluding to mental patients.”

FN has reached out to Gucci for comment.

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