Multi-Layer Ownership Structures. Italian Tax Enforcement

International buyers of high-value property in Sardinia and elsewhere in Italy rarely hold assets in their own name. A multi-layered ownership architecture — combining Italian companies, European holding entities, offshore vehicles, and trust or foundation structures — has been a standard feature of luxury real estate transactions for decades.

This is not inherently unlawful. Italian law explicitly preserves the taxpayer’s freedom to choose between different legal options, including those with different tax profiles, provided the chosen structure has genuine economic substance and does not cross into arrangements that are artificial, opaque, or designed primarily to obtain fiscal advantages the legislature did not intend. The line between legitimate tax planning and abuse of law — and between abuse and outright evasion — is the subject of this article.

Understanding where that line falls matters now more than it did five or ten years ago. The Guardia di Finanza has become significantly more systematic in cross-referencing ownership data, international beneficial ownership registries, and real property records. Investigations that begin with a villa or a yacht regularly expand into the full corporate structure behind the asset.

The Structure: Four Levels of Separation

The archetypal structure for holding a luxury villa in Sardinia — or anywhere in Italy — through an international arrangement involves some combination of the following layers:

1. The Italian Real Estate Company
A limited liability company (S.r.l. or S.p.A.), often registered in Milan, Rome or Olbia, holds legal title to the property. The property appears in the Italian land registry in the name of this company. The company files Italian tax returns, pays IMU and other local property taxes, and is visible to Italian authorities.

2. The European Holding Layer
The shares of the Italian real estate company are owned entirely by a holding company incorporated in a low-tax or flexible-regulation EU jurisdiction — Luxembourg, Cyprus, the Netherlands, or Malta are the most common choices. This layer provides a buffer between the Italian asset and the ultimate owner, and may facilitate intra-group loans, management fee flows, or intellectual property licensing.

3. The Offshore Cash-Box
The European holding is in turn controlled by an entity incorporated in a non-EU jurisdiction with minimal transparency requirements: the British Virgin Islands, the Isle of Man, Bermuda, or the Cayman Islands. This entity holds the economic value of the chain; its beneficial ownership details may not appear in any public register that Italian authorities can access directly.

4. The Trust or Foundation
At the apex of the structure sits a trust — administered by a professional trustee — or a foundation. The settlor (the person who transferred the assets into the structure) is not named as owner in any public register. The beneficiaries may be named in a letter of wishes held by the trustee but not registered anywhere visible. From the outside, no natural person appears to own anything.

This architecture, at its most sophisticated, can achieve genuine legal separation of assets, real privacy, and tax efficiency that is compliant with international standards. At its least sophisticated — or most aggressive — it is the pattern that the Guardia di Finanza and the Procura della Repubblica have prosecuted repeatedly.

The Italian Legal Framework: Abuse of Law and Simulated Structures

Under Article 10-bis of Law No. 212/2000 (the Taxpayers’ Statute, as reformed in 2015), Italian tax law defines “abuse of law” as one or more transactions lacking economic substance that, while formally compliant with tax rules, achieve essentially undue fiscal advantages.

The key operative consequence: the tax authorities may disregard such transactions and assess tax on the basis of the norms that were circumvented, as if the abusive structure had never existed.

Three elements are central to how this provision is applied in practice:

Lack of economic substance: the structure does not produce effects meaningfully different from its fiscal advantages. A holding company that has no employees, no offices, no real business activity, and exists solely to interpose a fiscal barrier between the Italian asset and its owner is a textbook example.
Undue fiscal advantage: the advantage obtained is one that the legislature did not intend to grant in the circumstances.
No valid non-fiscal reason: the taxpayer cannot demonstrate that the structure was adopted for genuine organizational, business, or succession-planning reasons that are not marginal.

It is important to note what Article 10-bis does not cover: it does not apply to criminal conduct. Where the structure moves from abuse into outright evasion — concealed income, false declarations, assets held through nominees without any transparency — the applicable framework shifts from administrative sanctions to criminal tax law (Legislative Decree No. 74/2000), which carries criminal penalties and opens the door to precautionary seizure.

When a Simulated Trust Is Seized

Italian courts have addressed the specific question of trust structures in tax enforcement contexts with increasing precision. The Court of Cassation has confirmed that a sequestro conservativo (precautionary seizure) is lawful where the trust appears to be simulated — that is, where the settlor continues in practice to exercise control over the assets, making the trust a formal screen rather than a genuine transfer of ownership and control.

The indicators that Italian courts and the Guardia di Finanza use to identify a simulated trust include:

The settlor retains de facto management powers over the assets held in trust
The trustee is not genuinely independent (a family member, a controlled entity, or a professional who takes instructions from the settlor)
Distributions from the trust to beneficiaries follow patterns that replicate what the settlor would have done directly
The trust documents were prepared after the initiation of tax proceedings or a fiscal inquiry

Where these indicators are present, the trust is treated as transparent: the assets are considered as still belonging to the settlor for tax and enforcement purposes, and can be seized before any criminal conviction or even a formal charge.

A Case Study: Operation Twin Trust (2011)

In August 2011, the Guardia di Finanza of Vicenza concluded an investigation into Mastrotto Group, one of Italy’s largest leather manufacturers, led by brothers Bruno and Santo Mastrotto. The investigation — internally designated “Operation Twin Trust” — revealed the following structure:

Two trusts established on the Isle of Man, used to conceal beneficial ownership of a network of financial assets
Four shell companies incorporated in Luxembourg, through which business flows and income were routed
€1.3 billion in assets held abroad and not declared to Italian tax authorities
€106 million in taxes evaded, including €2 million in undeclared VAT on the Luxembourg entities
Approximately 800 employees paid partially in cash off-payroll, in some cases receiving up to €50,000 per year in undeclared compensation

The investigation originated from a corruption inquiry: the brothers had allegedly paid bribes totalling approximately €360,000 to tax officials and professionals between 2006 and 2008 in order to reduce the outcome of prior Guardia di Finanza verifications.

The case concluded not with criminal conviction but with an accertamento con adesione — a consensual tax settlement between the taxpayers and the Agenzia delle Entrate — at a figure reported at approximately €27 million, a fraction of the initial assessment. This outcome illustrates both the power of the accertamento process and the negotiated nature of its resolution: the assessment was significant, but the structure of the settlement substantially reduced the liability relative to the gross figures identified in the investigation.

The Twin Trust case remains instructive not because it represents an extreme or unusual case, but because it illustrates, in detail, the exact architecture that Italian authorities are trained to identify: offshore trusts with nominee or controlled trustees, Luxembourg holding shells, and a domestic operating company as the visible Italian face of the structure.

The Costa Smeralda Enforcement Environment

The Sardinian context adds a specific dimension to this analysis. The Procura di Tempio Pausania — the public prosecutor’s office with jurisdiction over Gallura and the Costa Smeralda area — and the Guardia di Finanza commands operating in northern Sardinia have historically treated luxury real estate, fiscal compliance, and building planning as interconnected investigative fields.

Several high-profile enforcement operations in the area illustrate the pattern:

In 2015, the Guardia di Finanza executed a precautionary seizure of approximately €132.8 million in assets connected to the acquisition of Smeralda Holding (the company that owns a significant portion of the Costa Smeralda resort infrastructure) by Qatar Holding from Colony Capital. The investigation alleged €482 million in evaded capital gains taxes, achieved through the use of Luxembourg shell companies to structure the transaction as a share sale rather than a direct asset transfer.
In November 2025, the Guardia di Finanza seized bank accounts and liquidity of approximately €4 million from a Porto Cervo residence complex that the Procura alleged had been operating, for years, as an undisclosed hotel – a fiscal and commercial requalification of a real estate structure that had presented itself differently to the authorities.
In July 2026, the Guardia di Finanza seized assets worth approximately €50 million connected to two Roman entrepreneurs, including real estate, company shares, vehicles, and a vessel, with the structure having used nominees and hollowed-out companies to conceal beneficial ownership and accumulate €6.7 million in unpaid tax and public debts.

These cases are not isolated. They reflect a systematic enforcement posture in which the Guardia di Finanza uses cross-border data exchange (under the Common Reporting Standard and EU Directive on Administrative Cooperation), domestic land registry and company records, and judicial cooperation with foreign authorities to reconstruct who actually owns and controls Italian assets.

The Legitimate Principle and Its Limits

Italian law does enshrine a taxpayer’s right to choose the fiscally more favourable among different legal options. Article 10-bis(4) explicitly states that the taxpayer retains the freedom to choose between different optional regimes offered by law and between transactions with different tax profiles. The Court of Cassation has, in various decisions, confirmed that choosing a jurisdiction or a corporate form for legitimate tax efficiency reasons is lawful.

The limits of this principle are equally clear. Once a structure:

lacks genuine economic substance (no real business, no real employees, no real management in the intermediate jurisdictions);
conceals beneficial ownership in a way that prevents Italian authorities from identifying the natural person ultimately controlling or benefiting from the asset;
involves false declarations, nominees acting as screens for the real owner, or active concealment of assets from fiscal authorities;

It has moved from legitimate planning into the territory of abuse (administrative, non-criminal) or evasion (criminal). The distinction matters: abuse carries administrative sanctions; evasion carries criminal penalties and the possibility of precautionary seizure.

The practical implication for international owners of Italian assets: the legal option to minimise tax is real and protected by law, but it is conditioned on transparency, substance, and coherent documentation that can withstand the scrutiny of an Italian fiscal verification.

What This Means for International Property Owners in Sardinia

Govoni Law advises international owners and their advisors on the legal aspects of holding property in Sardinia, including situations where an existing ownership structure is being reviewed for risk, where a formal investigation or administrative procedure has been initiated, or where a proposed transaction involves an existing corporate or trust chain.

We do not design aggressive tax structures. What we can do is help you understand how an existing structure — one designed by tax advisors elsewhere — will be read by Italian enforcement authorities in the context of a Sardinian asset, and what procedural options are available at each stage of a formal verification.

All work is conducted in writing, in English.

Fiscal and Legal Isolation: How Multi-Layer Ownership Structures Look Under Italian Tax Enforcement