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Gucci owner Kering close to settling Italian tax case for 1.3 to 1.4 billion euros - sources

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Gucci owner Kering close to settling Italian tax case for 1.3 to 1.4 billion euros - sources
FILE PHOTO: The logo of Kering is seen during the company's 2015 annual results presentation in Paris, France, February 19, 2016. REUTERS/Charles Platiau   -   Copyright  Charles Platiau(Reuters)
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By Emilio Parodi

MILAN (Reuters) – French luxury group Kering is close to agreeing to pay between 1.3 billion (£1.1 billion) and 1.4 billion euros to settle a dispute with Italian authorities over unpaid taxes by its fashion brand Gucci, three sources told Reuters on Thursday.

An agreement between the French luxury goods group and the Italian tax authority is expected to be signed in the first days of May, said one of the sources, who all have direct knowledge of the matter.

This would be the biggest tax settlement ever agreed by a company with the Italian tax authorities.

Kering, which has consistently denied avoiding tax, saying its activities were fully compliant with all tax obligations, had no immediate comment, while the tax authority could not immediately be reached for comment.

Earlier this year, Kering said it faced a claim for 1.4 billion euros in unpaid Italian taxes, adding that it contested the preliminary findings.

The company’s Swiss-based Luxury Goods International (LGI) subsidiary has been under investigation for allegedly avoiding tax on earnings generated elsewhere.

Most of the allegations centre on Gucci, whose offices in Milan and Florence were raided by Italian police in late 2017.

In November 2018 Milan prosecutors wrapped up their probe into alleged tax evasion of more than 1 billion euros by Gucci for revenues booked in the years between 2010 and 2016.

The prosecutors say that revenues booked through LGI should be taxed in Italy and not in Switzerland.

By agreeing to a settlement, Kering would be spared from having to pay interest and sanctions for late tax payments, which one source said would have added around 500 million euros to the final bill.

(Reporting by Emilio Parodi, additional reporting by Sarah White, editing by Alexander Smith)

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