November 5, 2012 6:25 pm

Italian police seize castle in €65m tax probe

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Italian police have confiscated €65m of assets, including a 15th century castle, from the Marzotto family and its business associates for suspected tax evasion connected to the 2007 sale of the Valentino luxury fashion brand.

The seized assets belong to 13 people “linked to one of the most important industrial families in Italy active in the textiles and fashion sector”, the financial police said, without giving further details on the subjects of the investigation.

Two people familiar with the situation confirmed the Marzottos are under investigation over the €2.6bn sale of Valentino and its Hugo Boss subsidiary in Germany to Permira, the UK-based private equity group.

The assets, including apartments in Milan and Rome, a 25-room villa in Alpine resort Cortina d’Ampezzo and land, were taken preventively to cover €65m in taxes the 13 people are suspecting of having dodged when they booked a €200m capital gain from selling Valentino.

Members of the Marzotto family could not be reached for comment. But the two lawyers representing the Marzotto family called the allegations “completely unfounded”.

“There is bank documentation showing that the capital gains from the sale were duly declared and taxed,” the lawyers said in a statement. The money from the sale remained in the European Union, mostly in Italy, the lawyers added.

Tax evasion of all kinds has long been a problem in Italy. Some estimates indicate that as much as a third of the country’s economy is submerged and out of sight of tax authorities.

Silvio Berlusconi, the three-time Italian prime minister who stepped down last year, said while in office that tax evasion was justified when taxes were too high.

A Milan court last month sentenced Mr Berlusconi to four years in prison for tax fraud. Though an amnesty law immediately reduced the sentence to one year and Mr Berlusconi is unlikely to spend any time in prison because he has two levels of appeals to call on that could push the trial past its statue of limitations, many in Italy considered it a landmark ruling.

The Marzotto family members avoided Italian tax obligations by using a Luxembourg-based holding company for the Valentino sale.

But the finance police, sent on the request of Milan magistrates investigating the transaction, said taxes should have been paid because although the company that sold Valentino was registered in Luxembourg, its actual headquarters were in Italy.

The investigators identified the places in Italy where the Marzottos took the decision to sell Valentino, making it possible to demonstrate that the Luxembourg holding company was based in Italy, according to the police.

The seized castle, Villa Trissino Marzotto, is near the town of Vicenza and has been in the Marzotto family for 60 years. With more than 50 rooms, it was expanded in the 18th century and has on its grounds two Italian-style geometrical gardens, a small forest, a road lined with lemon trees and more than 100 statues.

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