Luxury Giant Kai Yun Group Will Pay Up To 1 Billion 400 Million Euro Tax.

According to insiders, the French luxury giant Kering will reach a settlement with the Italy tax bureau at the cost of 13~14 billion euros.

In December 2017, Italy's tax authorities recently investigated the headquarters of the flagship group Gucci (Gucci) in Florence and its offices in Milan. The procuratorate of Milan suspected Gucci suspected of evasion of taxes.

The Italy daily "La Stampa" reported that the amount of suspected tax evasion could be as high as 1 billion 300 million euros.

According to insiders, Kai Yun group and Italy Tax Bureau expect to reach an agreement in early May.

Once the agreement is reached, it will be the largest tax paid by the Italy tax bureau.

Kai Yun said in a statement that the group had discussed with the Italy tax authorities many times and ensured that all meetings were carried out in an open cooperation environment.

At the present stage, the two sides have not yet reached a specific amount of payment.

Once the Kai Yun group has reached an agreement with the Italy tax bureau, it will no longer have to bear interest and penalty due to delayed tax payment. The amount of the said part is 500 million euros.

Since 2017, the Inland Revenue Department of Italy has begun to verify the audit report of Kai Yun group from 2011 to 2017.

Kai Yun group's flagship brand and Italy luxury brand Gucci are their main respondents.

In January 2018, Gucci was passed through Off Shore Company to avoid tax for CEO Marco Bizzarri and employees.

In March 2018, the French news website "Mediapart" said that Kai Yun group had submitted false information, and tax evasion of 2 billion 500 million euros was made through the Swiss logistics center LGI.

They also pointed out that the 20 Italy employees dispatched to Switzerland by the Kai Yun group were still working in Italy.

Kai Yun group refute the report.

In November 2018, the prosecutor of Milan, Italy ended the tax investigation of Gucci. The result showed that the brand was suspected of tax evasion (the pfer of revenue to a more preferential tax system in another country) and 1 billion euros. Milan prosecutors are ready to formally sue Gucci for the case.

In January this year, the Italy Tax Bureau charged the Kai Yun group that its Swiss subsidiary Luxury Goods International should pay up to 1 billion 400 million euros of tax to Italy.

Tax officials believe that although LGI is headquartered in Switzerland, it mainly conducts business activities in Italy, so it should pay taxes to Italy tax bureau.

The Italy tax bureau will examine the audit results and make a final conclusion.

But Kai Yun group dissent.

They said that all the subsidiaries in Switzerland were doing frequent business activities, so they should comply with the law and pay taxes to Switzerland according to the company's financial condition.

The tax authorities in France and other countries understand and allow such a business model.

(see "ornate ambition": Italy tax bureau's 1 billion 400 million euros tax arrears allegations, Kai Yun group said that the subsidiary tax in Switzerland is beyond reproach).

Kai Yun group recently announced the first quarter financial results for the 2019 fiscal year ending March 31st: sales grew 21.9% to 3 billion 785 million euros, excluding the impact of exchange rate fluctuations and M & A pactions, an increase of 17.4%, slightly higher than analysts' expectations.

(see "ornate ambition": Asia Pacific market sales grew by 29.6% over the same period last year, pushing the group's latest quarterly results to exceed expectations).

Italy has been cracking down on tax evasion in recent years.

Besides Gucci, many other Italy luxury brands have also been subject to tax inspection:

In December 2016, at the request of the prosecutor, the court of Italy issued a tax investigation order to Prada Group CEO Miuccia Prada and her husband Patrizio Bertelli.

In November 2017, Prada paid 470 million euros to avoid tax disputes and signed a cooperation agreement with the tax authorities in Italy.

The heir of Italy's famous jewellery brand Bvlgari (Bulgari), the fifth generation of Nicola and Paolo, was accused of tax evasion in 2006-2010 years in 2015.

The co founder of Dolce & Gabbana was convicted of tax evasion and was acquitted.

After ten years of lawsuits, the Supreme Court of Italy made a verdict of innocence in 2-18 years, and the defendant did not have to pay any financial penalty.

Author: Jiang Jingjin