Karl Lagerfeld Under Fire For £15 Million in Tax Evasion

Karl Lagerfeld is the latest fashion icon to come under fire for allegations of tax evasion, and according to reports that came in yesterday is under investigation for hiding over £15million from the French government tax authorities using complex transactions between various companies.

According to WWD “the revelation was made by French news weekly L’Express, which published a three-page article Wednesday under the headline “L’argent voyageur de Lagerfeld,” or “Lagerfeld’s traveling money” in English.

The report alleges that the Chanel and Fendi’s designer avoided declaring more than 20 million euros, or £15 million at current exchange rates, in earnings over the past six years by funneling funds through companies located in Ireland, Britain, the British Virgin Islands and the United States.”

The investigation focuses on Lagerfeld’s 7L Parisian bookshop which founded in 1999 “houses a photo studio owned by a British-based company, which takes in the revenue from Lagerfeld's photography work.” According to L'Express, tax authorities suspect that foreign transactions enabled the Chanel and Fendi lead designer to hide his earnings as a photographer.

From a Fashion Law perspective, cases concerning high-end tax evasions have become a hot-button topic in Europe, and Lagerfeld who has held the position of chief designer at the house of Chanel since the 1980s, joins a recent list of established fashion designers that have faced tax scrutiny, including Miuccia Prada, Domenico Dolce and Stefano Gabbana, Bulgari, Valentino and Giorgio Armani.

This recent case now comes as a result of a move by the French Finance Ministry to crack down on fraud to ease budget strain. Even though the case does not concern Chanel or Fendi, we suspect that the effects are likely to have a damaging impact on both fashion houses.

So far there has been no comment from Lagerfelds representatives.

Stay tuned for updates as we hear more news.