Bulgari is being investigated for alleged fraudulent earnings declarations and evasion of tax payments of around 3 billion euro, or 4 billion dollars, starting from 2006, through a system of allegedly fictitious companies in the Netherlands and Ireland, in an attempt to avoid paying taxes in Italy.
Italy’s tax police, the Guardia di Finanza said it had confiscated real estate, life insurance policies, and corporate investments traceable to Bulgari executives for a total value of 46 million euro, or 60 million dollars at current exchange.
Paolo and Nicola Bulgari, chairman and vice chairman, respectively, of Bulgari , former CEO Francesco Trapani, and Maurizio Valentini, current legal representative of the Italian parent company, are among the executives named by the tax police.
“The company is extremely surprised by the arguments deployed in such order and declares that the foreign companies at issue are real and genuine companies performing an undisputable strategic role for the group, employing about 300 employees of various profiles,” said Bulgari, a subsidiary of LVMH
The Guardia di Finanza chief Alfredo Falchetti said that the investigations, which began in 2011, refer to the years from 2006 until 2010.
“It all started in 2011, when we found differences between the papers and the actual movement of goods. For example, jewels did not move from Ireland to Italy but from Switzerland to Italy,” said Falchetti.
According to the “escape strategy,” said the police, Bulgari “margins — the difference between revenues and costs of sales — were reallocated, through foreign controlled companies, in countries other than Italy, and, in particular, first in Switzerland, then in the Netherlands and, lastly, in Ireland.”
It was stated that Bulgari allegedly defined Ireland as “the only country available with a low fiscal pressure, 12.5% not located in a fiscal paradise.”
For this reason, Falchetti said Bulgari had chosen Ireland as its “final destination” as far as fiscal planning for the group was concerned.
Bulgari Ireland Ltd. (Beire) was founded and entirely controlled by the Italian Bulgari SpA with “the objective, only apparent, of stocking and shipping finished goods to the group’s commercial companies or third distributors around the world,” said the police statement.
It concluded by saying that Bulgari “omitted to declare corporate income taxes in Italy for almost 3 billion euro in the period 2006-2011, as well as a regional tax on production for more than 1.9 billion euro, or 2.5 billion dollars. Dividends that were unduly not taxed in the same period totalled more than 293 million euro, or 381 million dollars.”