Exclusive-Italian prosecutors seek trial for Campari chairman over alleged tax evasion

Italian Prosecutors Seek Trial for Campari Chairman over €1.29 Billion Tax Evasion

Details of the Campari Tax Evasion Case

By Emilio Parodi

Prosecutors' Allegations and Legal Proceedings

MILAN, Oct 8 (Reuters) - Italian prosecutors have requested that Luca Garavoglia, chairman of drinks group Campari, stand trial over alleged evasion of €1.29 billion ($1.45 billion) in taxes, two people with direct knowledge of the matter said.

Lagfin's Settlement with Revenue Agency

Lagfin, the Luxembourg-based family holding company that controls Campari, settled its tax dispute with Italy's Revenue Agency last December, agreeing to pay €405 million in instalments.

Separation of Tax and Criminal Proceedings

Under Italian law, however, tax proceedings and criminal investigations are treated as separate and independent matters.

Additional Individuals Involved

Prosecutors have also requested that Giovanni Berto, Lagfin's legal representative, stand trial.

Defense Statements

"The trial will establish beyond any doubt that our clients are innocent," lawyer Giuseppe Iannaccone told Reuters. Iannaccone and fellow lawyer Nerio Diodà are representing the two defendants.

Background and Financial Details

Prosecutors in the northern city of Monza believe the offence of fraudulent tax declaration is applicable in this case and have pursued the allegation of €1.29 billion in tax evasion that led to the confiscation of shares to that value from Lagfin last October.

Lagfin's Response and Case Dismissal

In a statement, Lagfin said that the case against it had already been dismissed on statute of limitations grounds in July.

"Accordingly, Lagfin cannot suffer any financial loss or prejudice as a result of the aforementioned proceedings," it said.

Preliminary Hearing and Next Steps

PRELIMINARY HEARING

A judge will now have to schedule a preliminary hearing, at the end of which a decision will be made on whether to send the defendants to trial or dismiss the case.

Campari Chairman's Background

Garavoglia, 57, has been chairman of Campari since 1994 and is the largest shareholder in the group through the Lagfin vehicle. 

Origins of the Tax Evasion Case

Alleged Undeclared Capital Gains

Prosecutors allege they uncovered €5.3 billion in undeclared capital gains between 2018 and 2020 on which Lagfin failed to pay a €1.29 billion exit tax levied on companies that transfer their fiscal residence abroad.

The 2018 Merger and Corporate Restructuring

The case stems from a 2018 merger between Alicros, the Italian company that controlled the Campari group, and Luxembourg-based Lagfin, which held a majority stake in Alicros. 

The merger combined the two entities into a single company holding a 51% stake in Campari, then worth more than €4 billion on the stock market, and transferred the structure to Luxembourg.

Authorities' Perspective on the Operation

According to prosecutors and the Guardia di Finanza finance police, the operation was designed to avoid the so-called exit tax on the capital gains when the company moved its registered office outside Italy.($1 = 0.8887 euros)

(Additional reporting by Elisa Anzolin in Milan;Editing by Keith Weir and Louise Heavens)