MILAN — A hearing took place in the Matteo Marzotto trial Friday just as the Italian government is working on a new law that would change the course of fiscal trials.
If the legislation is approved, individuals charged with tax evasion who have already paid their debt to the state before the start of a trial will not be tried at a penal level. As it stands, fiscal trials run parallel but independently of penal ones. A well-placed legal source told WWD that, for example, prosecutors are in a wait-and-see mode, and any decision on Miuccia Prada and Patrizio Bertelli is on hold, depending on whether this law will pass or not. In 2013, Prada and Bertelli settled with Italian tax authorities regarding unpaid taxes related to the location of their corporate headquarters in Luxembourg rather than in their home country. In the fall, Italy’s tax authorities started investigating the designer and her husband. The investigations revolve around “the accuracy of certain past tax filings” relating to foreign-owned companies. This follows a “voluntary disclosure” to tax authorities in December 2013 that resulted in an agreement between the couple and Italian tax officials. It is understood that Bertelli and Prada in 2013 paid 470 million euros, or $620.4 million at average exchange, to the tax office.
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In the case of Matteo Marzotto and his sister Diamante, who is also indicted, each sibling paid 1.6 million euros, or $1.7 million at current exchange, to the fiscal police, to avoid judicial issues related to the same facts at a fiscal level. The Marzottos, other family members and other defendants have paid more than 56 million euros, or $60 million, in fines to the Italian State. As reported in January after the previous hearing, judge Orsola De Cristofaro did not dismiss the case based on the lawyers’ objection to Marzotto being tried despite the payment of a fine.
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Neither Marzotto nor Diamante, indicted with other defendants for alleged omission of earnings declaration and tax evasion, were present in court on Friday. Marzotto has in the past declared that he had “always operated in the full respect of the law.”
The allegations involve the Marzotto family’s association with the sale of Valentino Fashion Group to private equity fund Permira in May 2007 for more than 782 million euros, or $839 million.
Also not present were defendant Bart Zech, administrator of the board of International Capital Growth, a firm the tax police believe to be a fictitious entity based in Luxembourg and managed in Milan, and allegedly created for the purpose of selling 29.9 percent of the Valentino group; real estate entrepreneur Massimo Caputi, and Pierre Kladny, president of the board of ICG.
According to the indictment, taxes on the profit derived from the transaction were never paid in Italy.
On Friday, prosecutor Gaetano Ruta asked Emanuele Garofalo, an employee of Italy’s Tax Agency, the Agenzia delle Entrate, who had first investigated the matter, to take the stand. Ruta was filling in for Laura Pedio, with whom he had headed the Domenico Dolce and Stefano Gabbana tax trial.
Garofalo reiterated that the tax office believed ICG was only formally based in Luxembourg and dismissed after the sale of the Valentino group. “It had been set up with the purpose of enhancing the shareholding in light of a future sale to Permira,” said Garofalo. To create a package to sell to Permira, several Marzotto family members, who were part of the trust company Spafid, sold their shares to ICG at 26 euros, or $28, each. ICG in 2007 sold the same shares to Permira at 35 euros, or $37.50, with a capital gain of 200 million euros, or $214.5 million, that were not taxed. “If ICG had been based in Italy, it would have had to pay 50 million euros [$53.6 million] in taxes,” said Garofalo. “If shareholders had each sold their stake individually, they would have had less contractual power, so within the first half of 2007, there was this movement of the whole package destined to be sold to Permira through Luxembourg.”
The defendants’ lawyers did not have any questions for the witness.