Italian court quashes Dolce & Gabbana fraud convictions

The Italian Supreme Court on Friday overturned fraud convictions and 18-month jail terms against celebrated fashion duo Domenico Dolce and Stefano Gabbana, their company announced.

"We have always been honest and we are extremely proud of this recognition by the Italian Court of Justice. Viva l'Italia," the two fashion house chiefs said in a statement.

"The Italian Supreme Court of Justice found Domenico Dolce and Stefano Gabbana not guilty of tax evasion," a company press release said.

In April an Italian appeals court had upheld a guilty verdict against Dolce and Gabbana for evading taxes totalling 200 million euros ($277 million).

Dolce and Gabbana, whose celebrity clients include Beyonce and Madonna, were accused of having transferred control of their brands to a shell company in Luxembourg in 2004 and 2005 to avoid paying Italian taxes.

Prosecutors had argued that setting up the Luxembourg company Gado -- an acronym of the surnames of the two designers -- while the operation was being run out of Italy was a bid to defraud the state.

They were found guilty in June 2013, and given 20-month jail sentences, which they appealed.

Dolce and Gabbana were originally accused of tax evasion of around one billion euros, but the court ruled that just 200 million euros of that sum was relevant.

On Friday the Supreme Court annulled the conviction, declaring that the prosecution case was "unfounded" and ending the case, Italian media reported.