Kering’s agreement with the Revenue is highly expensive (record-breaking): the French group will pay 1.25 billion euros

Yesterday Kering announced, in a press release, they have eventually come to an agreement with the Inland Revenue. The group will have to pay 1.25 billion euros: 897 million euros for taxes, the remainder for penalties and interests. “According to a preliminary estimate, this agreement will supposedly have an impact on Kering’s 2019 consolidated financial statements, as about 600 million euros, in terms of additional taxes, will affect the economic turnover; in addition, 1,250 million euros, in terms of outflow, will affect our financial balance sheet”, they pointed out in the release. The amount, agreed in the deal, is the highest ever signed in Italy: it is slightly lower than the one predicted, at the end of April, by Reuters and Il Sole 24 Ore, which had spoken about an agreement on 1.3 to 1.4 billion euros. The litigation between Italian Revenue and the French giant, led by François-Henri Pinault (in the picture), began because Italian Finance Police had charged the French group with an alleged tax fraud: around 1.4 billion euros, coming from eluded revenues, 14.5 billion euros, from 2011 till 2017. At that time, Luxury Goods International (LGI), a Swiss subsidiary of the French giant, was in charge of Gucci products marketing and sale: allegedly, they paid taxes (whose amount was lower) in Switzerland for commercial and business activities actually carried out in Italy. Looking at the agreement they signed, Kering admitted the charges filed by Italian finance officers. “Such agreement is going to remove both uncertainty about the financial situation of the luxury giant and investors’ scepticism about the corporate responsibility of the group”, commented Luca Solca, Bernstein analyst, while speaking to Business of Fashion.

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