In good living rooms, one of the most popular topics of conversation is the best way to save on taxes. This is what happened to Luca Garavoglia, president of Campari and John Elkan, CEO of Exor who had already explored the topic of tax exit.
Thus, as previously happened to Exox, which controls the Gedi group, now it is the Campari group to be in the crosshairs of Italian tax: it turns out that the control package of the historic Milanese house of Spritz, founded in 1862 by the visionary entrepreneur Gaspare Campari, was transferred from Italy to Luxembourg in 2018 through across-border merger operation without paying exit tax. This is the objection that the Italian tax authorities have addressed to Lagfin, the Luxembourg holding company that controls 51,3% of the shares and 38,8% of the voting rights of the Dutch Davide Campari Milano NV. It is now the Garavaglia family, after long family vicissitudes, that controls Lagfin which in addition to Campari, also has brands in its portfolio Aperol e crodino. Lagfin was founded in 1995. Its owners were shielded by the Fiduciaire Générale de Luxembourg, the same one that founded Jalfin and Ldr, two other Luxembourg companies that owned Lagfin shares and which merged with the Campari group safe in 2018.
The Revenue Agency taxes 1,2 billion. The file goes to the Prosecutor's Office
Based on a complex investigation by the economic-financial unit of the Guardia di Finanza of Milan, theInland Revenue asked the companies Garavaglia family payment of 1,2 billion euros in taxes. Furthermore, the file has arrived in the prosecutor's office, on the table attorney of the Republic of Milan, Marcello Viola, who entrusted it to the deputy prosecutors Enrico Pavone and Bianca Baj Macari of the III Department - International Affairs and transnational economic crimes. We hypothesize i crimes of failure to declare income and failure to pay taxes. Starting from a tax base of around 5 billion, Lagfin would have deducted over 1 billion in taxes from the treasury, a figure that represents around a tenth of the stock market value of Campari as a whole: yesterday the shares lost 1,08% or today another 2%.
Campari's defense
On the other hand, the Garavaglias dispute the conclusions of the Gdf and have started discussions with the tax authorities.
Campari Group specifies that "neither Davide Campari Milano Nv nor any of its subsidiaries are under investigation" and "no impact is therefore expected". “We believe and trust that our incontrovertible reasons” Lagfin states, “will be recognized as soon as possible in all competent bodies”. The criminal investigation, as has already happened in similar cases, will take into account a possible transaction with the tax authorities. It had already happened with Kering: in 2019, a failure to pay 1,5 billion in taxes from the subsidiary Gucci was found, which was then settled with a total agreement worth 1,25 billion.
Emails with Elkann
The Exor case had evidently set a precedent. In the documents of the investigation into Lagfin they emerged some emails exchanged between the president of the Campari group and John Elkann, who is not under investigation. In the messages, Garavoglia allegedly asked the representative of the Agnelli family for advice and information on the consultants used by Exor for the transfer operation to Amsterdam. And in fact the Campari affair has many similarities with the holding of the Agnelli-Elkann family which was involved in a tax dispute in which the Revenue Agency had contested its failure to pay the exit tax when the company's registered office and tax office were transferred to the Netherlands. The dispute ended in February 2022 with the payment of 746 million euros to the Italian tax authorities. On the occasion of the transfer, Exor had at least applied the Pex (Participation exemption), the regime that allows taxes to be paid only on 5% of capital gains deriving from asset sales. Lagfin, however, according to investigations by the Fiamme Gialle, did not even apply this measure.
The mother of the story: the merger of Lagfin with Alicros
The corporate action at the basis of the tax dispute took place in 2018, when the Luxembourg safe Lagfin merged and incorporated the Italian company Alicros, which has been extinct. The effect of the merger by incorporation of Alicros is visible in the 2019 financial statements of Luxembourg's Lagfin. As a result of a change in accounting methods, the authors of the document write, the company's assets had increased by almost 1,1 billion euros. At the same time, a permanent establishment of Lagfin was created in Italy (formally a branch of the Luxembourg holding), to which the assets of the Italian company were attributed.
However, investigations by the Guardia di Finanza would have established that the financial holdings were mostly managed from Luxembourg and not from Italy, where instead some smaller assets such as real estate were managed. Hence the accusation of having transferred the shareholdings abroad without paying the exit tax.
At the time of the merger, Alicros controlled financial holdings worth 1,14 billion euros. The most important was 51% of Davide Campari Milano Spa (transferred to the Netherlands in 2020), whose balance sheet value was just over one billion euros. Then there were LC Partners, a real estate company from Missouri, in the United States, and 1403 2nd Avenue, a Delaware-based company established for a real estate investment in New York. In addition to the Italian branch, which is based in Sesto San Giovanni, Campari's headquarters, in 2018 Lagfin also established a branch in Switzerland, in Paradiso, on the outskirts of Lugano, which deals with more financial activities.
