Italian prosecutors have accused the fashion house Dolce and Gabbana of failing to declare revenues of around €840 million, Italy’s main business daily reported.

Investigators have closed their inquiry against founders Domenico Dolce and Stefano Gabbana, as well as five other people, but no formal charges have yet been presented, Il Sole 24 Ore said, citing prosecutors in Milan.

The allegation is that Dolce and Gabbana created a company in Luxembourg in 2004 and 2005 which was given control of the group’s brands, thereby avoiding Italian taxes. The Luxembourg company, Gado, was in fact run from Italy.

The unpaid taxes amount to €420 million, Il Messaggero daily reported.

Italy has been cracking down on widespread tax evasion in recent months in an effort to raise government revenues following the global economic crisis.