Volcom convicted of tax evasion dating from 2008-2009
On Tuesday, May 12, the Bayonne Correctional Court fined the company Volcom 150,000 euros for tax evasion. The ruling, which was reported by the newspaper Sud-Ouest, came following several years of proceedings.
Kering acquired the company in 2011.
The ruling concerns misconduct discovered by the French tax administration regarding the US board sports brand’s 2008 and 2009 fiscal years. The fraud was demonstrated to the Bayonne Correctional Court by the tax authorities on March 31, 2015. According to the regional newspaper, the affair was brought to light during a tax audit made in 2011. Volcom, whose European headquarters are located in Anglet, created a company in 2007 in Switzerland. Its purpose was to reduce the brand’s tax base in France: 3.5 million euros in 2008 and 4 million in 2009.
According to Sud-Ouest, the evidence is overwhelming. The newspaper quoted the prosecutor as stating: “This was a gross error made by white collar delinquents”. The operation was nevertheless financially interesting: the establishment of a Swiss company cost 619,000 euros, while the tax benefits represented 1.6 million euros in 2008 and 2 million in 2009. The entity was then presented as Swiss subcontractor employed by the company’s French subsidiary.
In the end, Volcom, which has since been acquired by Kering, faces a tax adjustment and must pay its taxes. The attorney representing the tax authorities even requested a 1 million euro penalty, while Kering challenged this request on the grounds that it didn’t own the company at the time of the fraud. The Swiss company has since been liquidated.
Kering recently named Todd Hymel CEO of its Action Sports brands (Volcom and Electric). In regards to Volcom’s former practices during these years, Hymel’s financial expertise was certainly not coincidental.
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