Italian tax authorities have recently seized shares worth approximately €1.29 billion (about $1.5 billion) from Lagfin, the Luxembourg-based holding company that controls more than half of the Campari Group, as part of a major tax fraud investigation. The enforcement action centers on allegations of tax evasion related to a 2018 cross-border merger involving Campari‘s Italian and Luxembourg holding companies, where authorities claim more than €5.3 billion in capital gains were not declared, thereby avoiding required Italian “exit tax” obligations.
Details of Enforcement Actions
- The seizure amounts to roughly a sixth of Campari’s total market value, but only affects the controlling shareholder, Lagfin, not Campari Group (Davide Campari-Milano N.V.) or its subsidiaries directly.
- The investigation targets Lagfin and several executives, including Campari Chairman Luca Garavoglia, accusing them of fraudulent tax declarations during the merger, which aimed to move assets abroad for tax advantages.
- Lagfin and the Garavoglia family have denied all allegations and stated their intent to defend themselves, emphasizing that the company and its subsidiaries are not implicated in any wrongdoing.
Potential Outcomes and Industry Impact
- Historically, similar Italian tax cases have resulted in negotiated settlements, with companies often paying a fraction of the amounts initially claimed.
- Analysts suggest that if a settlement is reached, Lagfin may regain much of the seized sum, and that the enforcement action should not impact Campari Group‘s ongoing business, sales, or corporate operations.
Company and Market Response
- The Campari Group has publicly stated that the dispute is strictly between Lagfin and the Italian authorities, with no expected impact on Campari’s business or finances.
- Share prices of Campari fell roughly 5-6% following news of the asset seizure, reflecting investor concern even though the core business is not implicated.
In summary, the latest tax enforcement against the Campari manufacturer specifically targets its controlling shareholder Lagfin over alleged undeclared capital gains and associated tax liabilities from a 2018 merger, with both Lagfin and Campari maintaining that the group’s business and its subsidiaries are unaffected by the probe.
