Kering on Thursday confirmed that French authorities opened an inquiry into its taxes in February 2019 but continued to refute allegations of fraud, following a report published by the investigative news site Mediapart.
“Kering had not been previously informed of this inquiry,” the French luxury group said.
“The inquiry appears to be linked to the potential consequences for Kering French companies resulting from legal proceedings initiated in November 2017 involving LGI, the Group’s Swiss subsidiary,” it continued. Those proceedings resulted in a 1.25 billion euro settlement between Gucci and Italian tax authorities in May 2019.
“Kering refutes in the strongest possible terms the allegations contained in the press article and forwarded by other media,” the group said.
The preliminary inquiry was opened by France’s Parquet National Financier, the country’s financial public prosecutor’s office.
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“The group intents to fully cooperate with the inquiry, in complete transparency and serenity,” the luxury conglomerate said.
“Kering will continue to communicate diligently and openly about tax litigation,” it added.
According to reports, the investigation centers on a financial arrangement that allegedly allowed the group to avoid paying 2.5 billion euros in taxes between 2010 and 2017, including 180 million euros in France, by declaring business in Switzerland that had mostly been generated in Italy.
The Italian Revenue Agency had investigated the company’s tax payments related to the sales in Italy of Gucci products between 2011 and 2017, resulting in last year’s settlement.
Italian tax authorities had said that, in distributing Gucci products in Italy through its Switzerland-based company Luxury Goods International, Kering had avoided paying taxes in Italy. Kering’s hefty settlement threw the spotlight on tax rules in Italy and Europe, with some experts noting a lack of coordinated legislation on the continent.
It is not the only large international company to tangle with Italian tax authorities: Apple paid 318 million euros to the country in 2016, while Google paid a total of 306 million euros to regularize its fiscal position in the country the following year.
This story was reported by WWD and originally appeared on WWD.com.
