Luxottica Group became the second Italian eyewear company this week to announced it would pay tens of millions of euros to national tax authorities in Italy to resolve a dispute over how it handled transfer pricing and other complex international tax issues.
Luxottica, which owns the Oakley and Ray-Ban sunglasses brands and the Sunglass Hut retail chain, reported it took an adjustment to its fourth quarter net income after Italian authorities determined the company had underpaid its 2007 tax return by €26.7 million.
“The Group has decided to accept the auditors’ report on their findings and pay the resulting sums for the year 2007,” Luxottica disclosed Friday in its earnings report for the fourth quarter and full fiscal year of 2013. “This decision was made knowing that the subject matter of the dispute is largely subjective and lends itself to divergent positions that are not easy to resolve in litigation, except at the cost of long and expensive defense proceedings with an inevitably uncertain outcome. As a consequence, the Group decided on its own initiative to prudentially allocate provisions of €40 million for the following years.”
Earlier this week, Safilo Group of Italy disclosed it would pay Italian tax authorities €21 million over the next four years to settle a dispute over transfer pricing and other complex international tax issues revealed by audits of its result sfo 2007 through 2011. Safilo also said it chose to settle the dispute rather than fight in court over something as subjective as transfer pricing.
