Dolce and Gabbana Tax Evasion Ruling Overturned

Stefano Gabbana and Domenico Dolce
Photo: Venturelli/WireImage
Stefano Gabbana and Domenico Dolce's tax evasion ruling has been overturned.

The taxman cometh!

Domenico Dolce and Stefano Gabbana are seeing red after Italy's highest court overturned an April 2011 ruling absolving the design duo of tax evasion, Women's Wear Daily reports.

After a Milan judge dismissed charges against the designers and five other defendants, a prosecutor appealed the decision, which was ultimately overturned on November 23 by Italy's equivalent of the Supreme Court.

Dolce and Gabbana and their co-defendants, including their accountant, are accused of evading approximately $562 million in taxes following the 2004 sale of the Dolce & Gabbana and now-defunct D&G labels to their Gado Srl holding company, which is based in Luxembourg and is therefore subject to a lower tax rate.

On November 24, Gabbana expressed his frustration with the flip-flop, tweeting that the government were "ladri" (Italian for thieves).

“They don’t know what to do to get money out of us," he vented in a tweet that was later deleted. “It’s really true that in Italy they do what they want … as they please … Perhaps it would be best to leave … ”

The heated remarks sparked some messages of support, though others chastised the designer for bashing Italy and called for a boycott on Dolce & Gabbana products.

So, where does this leave our favorite Italian duo? A new preliminary hearing with a different judge is expected to take place in early January, bringing the case "back to square one," a legal source tells WWD.

“I assume the Supreme Court believes the [original] judge’s decision to clear the designers was tainted by a legal flaw, a defective motivation or an error in the application of the law," the source says.

If convicted, the designers could face up to three years in prison or a fine of about $1.3 million.