The designers, who are nearly as famous as the stars they dress, were not present in court in Milan and have denied the charges.
Public prosecutor Gaetano Ruta had asked for two and a half years.
A company spokesman declined to make an immediate comment.
The success of Dolce & Gabbana’s sexy corset dresses and sharply tailored suits favoured by celebrities like Kylie Minogue, Kate Moss and Bryan Ferry have earned them a glamorous lifestyle.
The case dates back to an investigation that began in 2008, when authorities unleashed a tax avoidance crackdown as the financial crisis began to bite.
But the probe that ensnared the two designers is one of the few high-profile cases to come to trial so far.
The judge ruled that the pair sold their brand to Luxembourg-based holding company Gado in 2004 to avoid declaring taxes on royalties of about €1bn.
The pair’s flamboyant designs are inspired by the sultry southern Italian island of Sicily, where Dolce was born in 1958. He met Gabbana, now 50, in the latter’s home town of Milan, where they showed their first collection in 1985.
The brand took hold internationally in the 1990s and global revenues hit just under €1.5 billion in 2011.
The pair have always said they are innocent.
“Everyone knows that we haven’t done anything,” Gabbana tweeted in June 2012 after the trial was ordered.
By last night, Gabbana’s only reaction was to tweet a close up photograph of the branch of a colourful citrus tree, just seconds after the verdict.
Defence lawyer Massimo Dinoia pledged to appeal against the conviction, saying the fact the court issued an acquittal on a charge that had expired, instead of just letting it fall to the statute of limitations, “means the proof of their innocence is evident”. Italy’s appeal process is both complicated and lengthy.