Fashion designers Domenico Dolce and Stefano Gabbana were each given a reduced sentence of 18 months in jail yesterday by an Italian Court for a conviction on charges of hiding hundreds of millions of euros from Italian tax authorities.

The appeals court upheld a verdict issued last June against the pair on charges of using Luxembourg holding company Gado to avoid paying taxes on royalties of about €1bn (£820m).

In court yesterday, the two designers were each given suspended sentences of 18 months in jail  – reduced from 20 months because of statute of limitations applied to certain facts in the case.

Also, a fine of up to 10 million euros was also imposed over avoidance of the payments in Italy, where corporate taxes are among the highest in Europe.

According to a lawyer for the pair who have denied any wrongdoing, an appeal will be lodged against the decision. “I am speechless. We are all shocked. The judgment is inexplicable and we will appeal,” Massimo Dinoia said.