Kering upholds French monetary audit for allegedly avoiding $ three billion in taxes

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Kering upholds French financial audit for allegedly avoiding $ 3 billion in taxes

Gucci’s parent company Kering has been “under investigation for tax fraud since February 2019,” the AFP said on Wednesday, citing a statement by the French financial prosecutor and “confirmed” an existing report by the French news publication Mediapart that the supervisory authorities in the EU are during the investigation of the in Paris-based luxury goods conglomerate through a system that allegedly allowed it to avoid $ 3 billion in taxes between 2010 and 2017, including € 180 million in France, by making the business tax-free in Switzerland-friendly jurisdictions.

In a statement Wednesday, Kering, which owns luxury goods brands such as Gucci, Saint Laurent, Balenciaga, Bottega Veneta and Alexander McQueen, dismissed the “wholly unfounded allegations of tax fraud” and stated that it was “unaware of an investigation into its activities as in the Article reported. If so, the group would fully cooperate with the authorities involved in a possible investigation with complete transparency and serenity. ”

Fast forward to Thursday and it turns out that Kering is indeed at the center of a tax investigation. In an official press release, the group headed by François-Henri Pinault said that following a press article published online on December 15, 2020 involving Kering, the French Parquet National Financier has confirmed a preliminary investigation into Kering initiated in February 2019 “and stated that it had” not previously been informed of this investigation “.

The group, which “vehemently refutes the allegations contained in the press article and relayed by other media outlets,” further claims that “the investigation appears to be linked to the activities” that led to the May 2019 settlement with the it closed Italian authorities after allegedly failing to pay $ 1.6 billion in taxes in Italy related to its Gucci brand between 2011 and 2017.

The settlement was the highest ever between a company and Italian tax authorities, and Kering paid $ 1.01 billion in after-tax plus interest payments and penalties, plus an additional tax charge of $ 673.51 million in his financial accounts for 2019 This led to the allegation that the luxury goods giant had become embroiled in a large-scale system to avoid paying taxes in Italy and, in an effort to do so, had allegedly relocated about 20 employees from its French or Italian offices to Switzerland the tax optimization system, however, claimed that some of them continued to work effectively in Italy. ”

Both Kering and Gucci have “challenged” the reasons for the tax authority’s investigation from the start.