Kering said that the French financial public prosecutor (Parquet National Financier) has opened a preliminary inquiry concerning the company in February 2019.

The French luxury goods group added that it had not previously been informed of the inquiry. The comments come following media reports about the prosecutor investigating the company for alleged tax fraud.

“The inquiry appears to be linked to the potential consequences for Kering French companies resulting from legal proceedings initiated in November 2017 involving LGI, the Group’s Swiss subsidiary. The proceedings resulted in a settlement between Gucci and the Italian tax authorities in May 2019,” Kering said.

Kering added that it “refutes in the strongest possible terms the allegations contained in the press article and forwarded by other media”, adding that it intends to fully cooperate with the inquiry.

According to the online news site Mediapart, which first reported on the matter, Kering allegedly established a system allowing it to declare in Switzerland activities carried elsewhere, primarily Italy, and avoid paying 2.5 billion euros in taxes between 2010 and 2017, of which €180 million in France.

The settlement reached with the Italian tax authorities in 2019 totaled €1.25 billion, the highest ever agreed by a corporation in Italy. The dispute concerned profits and transfer prices applied between 2011 and 2017 by the group’s Swiss subsidiary, Luxury Goods International (LGI), and Gucci, the rapidly growing Italian fashion house owned by the French luxury group.