Will Gucci'S Performance Of Tax Evasion Be Blocked?

According to a report from the world clothing and shoe net, a report released last Saturday showed that the Italy tax police (the national police force specializing in financial crimes) had a luxury brand in Italy last week.

A financial investigation was conducted in offices in Milan and Florence. Sources said that the investigation stems from Milan prosecutors' suspicion that Gucci is suspected of evasion of tax and pfers profits to countries with lower tax rates.

Gucci confirmed that there was indeed an investigation and issued a statement that "the company is actively cooperating with the relevant departments, and is confident of its business correctness and pparency."

Italy

Tax evasion has been a problem for many years, and the Italy tax authorities have been taking action. The Italy luxury giants that had been investigated included Bulgari, Valentino, Prada, Dolce & Gabbana, Luxottica group. However, in the previous case, the final findings were settled with the Italy authorities by fines and tax increases.

As of the three quarter of September, Gucci recorded an organic sales growth of 49.4%, further faster than the 39.4% in the two quarter, much higher than the 30% of the market forecast and 17% of the same period last year. The revenue reached 1 billion 553 million 800 thousand euros, accounting for 40% of the group's total revenue.

Gucci's strong growth trend has no signs of cooling down in the past two years. It is a cash cow well deserved by Kai Yun group. At the same time, Gucci's profitability has also risen. As of the end of June, the company's operating profit increased by 69% to 907 million 300 thousand euros, compared with 536 million 900 thousand euros in the same period in 2016.

Jean-Marc Duplaix, chief financial officer of Kai Yun group, said in a conference call with investors that the company had never worried that Gucci would remain present.

The growth rate of share, in this regard, Kai Yun group as the backing of the brand, will provide sufficient financial support to Gucci.

Gucci is not alone in getting into tax trouble.

Matteo Marzotto, the former chairman of the Italy brand Valentino, was also charged with tax evasion of 71 million euros; Armani paid 270 million euros to Italy tax bureau to settle the tax investigation; the high-end eyeglasses manufacturer Safilo also reconciled at the expense of 21 million euros; the two founders of Dolce&Gabbana had gone through several years of tax evasion and sentenced to one and a half years, with two founders insisting on appealing to the high court. The latter finally sentenced two designers to innocence, and Dolce&Gabbana was the rare luxury brand that would choose to be in court with the government.

In addition, LVMH Group CEO Bernard Arnault also made headlines on tax avoidance news this year. It is reported that Arnault, France's richest man, was accused of placing some of her equity stake in six shadow companies in November this year, and using many consulting companies to avoid tax.

Luxury companies frequently fall into the tax investigation crisis, and most companies have adopted the tax avoidance mode of low tax state registered shell companies as the main trading companies while operating in high tax countries. This is mainly due to the different tax rates in various countries. The high rate of tax Off Shore Company in France, Germany, Italy and Britain has a high rate of existence. At present, Luxemburg, Switzerland and Holland are the main tax avoidance places of European heavy tax state enterprises and companies.

Luxury brands often focus on their own image, and continuous tax investigation will bring uncertainty to investors. So most brands worry that the endless investigation will bring more expenditure, and they have to pay taxes in succession. Brands like Dolce&Gabbana continue to appeal that they have made reasonable tax arrangements.

Because of the intangible value of the luxury goods company, such as more brand connotation, product design and authorization, the law bar for intangible value is still imperfect, and the development of science and technology and commerce is always faster than laws and regulations.

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