Milan—If you think the IRS gives you problems: designers Domenico Dolce and Stefano Gabbana of Dolce & Gabbana fame were found guilty today of tax evasion and a Milan court sentenced them both to one year and eight months in jail.
According to press accounts, the duo had denied they evaded more than 400 million euros in taxes when they sold their D&G and Dolce & Gabbana brands to a holding company, Gado, they had established in Luxembourg in 2004 where they would pay a lower tax rate than in Italy.
However, prosecutors maintain that the duo evaded taxes on income of 416 million euros each and 200 million euros through the Luxembourg company.
In April 2011, a judge threw out a tax evasion and fraud case against the pair, but Italy’s high court overturned that ruling saying they could be prosecuted for tax evasion but not for fraud.
A Milan court ordered Dolce and Gabbana to pay a 343 million euros in fines earlier this year.
Dolce and Gabbana might never actually spend any time in prison despite Wednesday’s sentence since they are likely to appeal the verdict.