Fashion designers Domenico Dolce and Stefano Gabbana - Dolce & Gabanna - were given slightly reduced sentences for tax evasion on Wednesday but a court ultimately upheld the verdict it issued last June. The fashion giants were give 18 months in jail, suspended, for hiding hundreds of millions of euros from Italian tax authorities.

Dolce and GabbanaDolce & Gabbana - Still Tax Evaders

A court found the pair guilty of using Luxembourg holding company Gado to avoid paying taxes on royalties of about $1 billion. The original sentence of 20 months was dropped to 18 months because a statute of limitations applied to certain facts in the case.

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A lawyer for Dolce And Gabbana, who have always denied any wrongdoing, said they would appeal against the decision. "I am speechless. We are all shocked. The judgment is inexplicable and we will appeal," Massimo Dinoia said.

The case stems from an investigation that began in 2008 when Italian tax authorities stepped up their fight against evasion as the global financial crisis kicked into action.

"Luxury is one of the few sectors to have done well in recent years," a partner specialising in tax at Grant Thornton in Milan told The Guardian.

"It is easier to go and ask for money where there is money as opposed to going to a troubled sector."

Giorgio Armani paid $270 million to tax authorities in early April to settle a dispute over payments from the groups' subsidiaries abroad. While Prada Holding, which controls Prada, paid a reported $420 million to settle taxes in Italy in December. 

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