Gucci hub in Milan allegedly at centre of tax complaint against Kering

The Gucci hub in Milan, a large building housing the maison's offices, exhibition spaces and catwalks, is currently embroiled in allegations of tax evasion a new exposé has revealed.

Italian newspapers Mediapart and Domani said they had obtained the exposé which had allegedly been sent to the country's governmental tax agency Agenzia delle Entrate last year by a former employee. According to the reports, the luxury multinational chose a company owned by the wife of Jean-François Palus, the group's number two, as its supplier for the 100 million euro real estate project.

As summarised by Domani, the complaint has requested for the Agenzia delle Entrate to verify the extent to which Palus' wife's company worked on the Via Mecenate project, as invoices issued may have been inflated and Kering would thus have evaded taxes. In the hypothesis described in the complaint, the invoices therefore would have been budgeted by the fashion group as costs, so as to reduce the tax base and pay less tax.

Responding to the matter, the luxury group, from its Parisian headquarters, emphasised that "the services provided between 2014 and 2016 by the architectural firms indicated by you (i.e. by Domani and Mediapart, ed.) correspond to real documented auditing, consulting and project management assistance services, which proved to be of benefit to Kering and resulted in significant savings on the total cost of the renovation work. These services were invoiced and paid for at market rates".

Looking at the company's financial results, Kering's revenues for the first quarter of 2024 fell 11 percent in terms of turnover and 10 percent on a comparable basis, to 4.5 billion euros. Revenues from the directly operated retail network decreased by 11 percent on a comparable basis, due to lower shop traffic.

In the first quarter of 2024, Gucci's revenues were 2.1 billion euros, down 21 percent on a reported basis, and 18 percent on a comparable basis.

Revenues from the directly operated retail network decreased by 19 percent on a comparable basis in the first quarter and were particularly affected by a sharp decline in Asia Pacific.

This article originally appeared on FashionUnited.IT. Translation and edit by: Rachel Douglass.