Kering is facing a claim for $1.6 billion in unpaid Italian taxes, the French luxury goods group disclosed on Friday, adding that it contested the preliminary findings.
Luxury Goods International (LGI), the company’s Swiss-based subsidiary, has been under investigation for allegedly avoiding tax on earnings generated elsewhere.
The probe has largely centred on Kering’s biggest revenue driver, Gucci. Italy’s tax police carried out checks in 2017, at Gucci’s Florence headquarters and Milan offices, and drew up the report that has now been handed to Kering, a source close to the investigation said.
Kering has consistently denied avoiding tax, saying its activities were fully compliant with all tax obligations.
In its statement on Friday, the group said the Italian tax authorities’ findings for the years 2011-17 had yet to be finalised by their own enforcement team.
“Kering challenges the outcome of the audit report both on the grounds and the amount,” the company said, adding that it “does not have the necessary information” to record a provision against any potential bill for back taxes or penalties.
Reuters reported in November that Milan prosecutors were wrapping up their tax probe into Gucci and Kering, which could potentially lead to a trial.
Kering is due to report full-year results on 12 February.