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SETTLING UP: Following the tax audit started in January concerning the year 2007, Luxottica Group will pay 33 million euros, or $45 million at current exchange rate, to the Italian Revenue Agency. The audit concerned alleged irregularities in the use of a practice called transfer pricing, the methods whereby intra-group prices are determined.
Although the Italian eyewear giant remains convinced of the legality of its operations, it has decided to pay the sum to avoid going to trial. “The subject matter of the dispute is largely subjective in as much as it pertains to an evaluation of the arm’s length nature of the prices applied to foreign subsidiaries,” Luxottica explained. “Thus, the subject 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.”