MILAN Fashion house Prada (1913.HK) said it would be demanding a 42 million euros (34 million pounds) refund from Italian tax authorities on revenues it made at its Netherlands-based holding company.
Prada said it would go to court to appeal a decision, made earlier this year, by the tax office compelling it to declare in Italy any income from 2010 and 2011 from its Netherlands-based holding company Prada Far East BV.
The Hong Kong-listed company, which competes in the luxury goods sector with Louis Vuitton (LVMH.PA) and PPR's (PRTP.PA) Gucci, said it only agreed to pay the sum in October to avoid further penalties from the tax body.
"We don't agree with the interpretation of the regulation and we will challenge it," Prada Chief Financial Officer Donatello Galli said in a conference call with analysts.
Milan-based Prada, which is 80 percent-owned by Dutch Prada Holding BV, said the case was triggered by a misinterpretation of new 2010 accounting rules.
"This is a problem that is affecting other companies in Europe, such as in Britain and France," added Galli.
European governments are intensifying efforts to root out tax avoidance costing them around 1 trillion euros ($1.3 trillion) every year.
High-profile tax avoidance cases have involved Internet giant Google GOOG.MI, coffee chain Starbucks SBUX.COM and Amazon.
Italian officials have stepped up tax surveillance and collection efforts in recent months as part efforts by Mario Monti's government to bring Italy's huge public debt down.
Prada said on Thursday it beat quarterly profit forecasts, lifting hopes for holiday sales of its leather bags and colourful dresses despite recession at home.
(Reporting by Antonella Ciancio; Editing by Lisa Jucca and Mike Nesbit)