AN Italian appeals court on Wednesday upheld a tax fraud conviction for Domenico Dolce and Stefano Gabbana, the founders of the world-famous fashion label Dolce & Gabbana, sentencing them to a suspended 18-month jail term.

The designers stood accused of failing to pay tax on income of $277 million by creating fictitious companies in Luxembourg in order to dodge heftier corporate tax rates in their home country.

In a first instance ruling in June, each was sentenced to 20 months' imprisonment.

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On appeal, the prosecution asked the court to drop the charges and acquit them, but Milan judges ignored the advice and confirmed the guilty verdicts, with a slight reduction in the jail term.

The court also upheld a fine of about $690,000 euros, and sentenced four other defendants — three Dolce & Gabbana managers, including Dolce's brother Alfonso, and a tax consultant — to suspended prison terms ranging from 14 to 18 months.

“I am speechless. I am flabbergasted. We will definitely appeal,” said Massimo Dinoia, a lawyer for the designers.

In Italy, rulings can be challenged twice before they are final.

The tax case against Dolce & Gabbana started in 2008.

At the end of a civil lawsuit in 2013, the company's founders were fined $475 million.

But criminal proceedings remained open against them, leading to Wednesday's convictions.