MILAN, May 25 (Reuters) - Italian financial police have notified Dolce & Gabbana of steps to recover taxes on what the designer duo described as a "completely abstract" 800 million euros ($1.12 billion).

Dolce & Gabbana Spring-Summer 2009

Domenico Dolce and Stefano Gabbana, among Milan's top fashion names, said in a statement the issue stemmed from the sale of their brands in 2004, for which they received 360 million euros.

Financial police in the last few days "notified us of a request to recover taxation for 2004 on 800 million euros. It's an absurd demand based on a completely abstract calculation", said the designers, known for their use of gold and baroque embellishments.

They denied any wrongdoing, saying, "This higher taxable sum ... is a virtual figure we have never received, the result of a theoretical accounting exercise."

A source close to the matter told Reuters on Saturday 23 May the pair were being investigated for a tax matter that had no criminal implications.

The source said the Milan financial police had sent a report to the government's tax agency, which would decide what to do.

(Editing by Will Waterman)