Italian police confiscate assets worth 46 million euros from Bvlgari executives on tax fraud

Italian police have seized assets worth 46 million euros from Bvlgari executives (Paolo and Nicola Bulgari, CFO Maurizio Valentini and interim CEO Francesco Trapani) on suspicion of fiscal fraud. Between 2006 and 2011, the executives allegedly reallocated about 3 billion euros of Rome-based Bulgari’s revenue into foreign subsidiaries outside of Italy, including units in Switzerland, the Netherlands and Ireland, to avoid paying a higher rate of tax, according to the statement. In response, Francesco Trapani said that the accusations are ”grotesque and unfounded” and that his compay has always respected fiscal regulations.

In an official statement, Bvlgari, which is owned since last year by giant LVMH, said that the accusations are false and the investigations will prove so. The company also insisted that it will notify all authorities in charge claiming that the fiscal authorities had no right to inform media of the seizure of assets before advising the company.

Irish corporate records show that a Bulgari unit called Bulgari Ireland Ltd. reported 693.7 million euros of sales in 2011, the most recent year available. Those sales were mostly to other Bulgari units and included 34.5 million euros of sales in Italy.

Under a typical structure, an Irish operating company making sales around the world would shift the resulting profits out of Ireland by using intra-company payments to other subsidiaries in places such as Bermuda, the Cayman Islands and Switzerland. The payments often get funneled through Holland to avoid Irish withholding taxes on those payments leaving Ireland. While it’s unclear from Bulgari’s Irish filings if or how profits were moved outside of Ireland, the unit reported it owed 121.7 million to other Bulgari entities as of the end of 2011.

adapted from AP and Bloomberg

Francesco Trapani, interim CEO, Bulgari