EU Sanctions Italy 2026: When Your Trust Fails the CJEU Test

How three Italy-linked court cases rewrote the EU asset-freeze rulebook — and what foreign investors, trading companies and trustees must do before the Guardia di Finanza knocks

LANG: English (en) · AREA: Transport, Customs & Trade Compliance · TYPE: Case note (court decision) · MODEL: Sonnet 5 · SEO 84/100 · Flesch Reading Ease 25 · QA acceptable

ABSTRACT: Three groundbreaking rulings issued by the Court of Justice of the European Union on 21 May 2026 — all triggered by referrals from Italy's own administrative court — have confirmed that a Bermuda or offshore trust cannot shield assets from an EU Russia-related asset freeze simply because the sanctioned person was formally removed from the trust deed. Simultaneously, Italy's Legislative Decree No. 211 of 30 December 2025, in force since 24 January 2026, has made sanctions breaches a full criminal offence for both individuals and companies operating in Italy. Together, these developments create an entirely new risk calculus for foreign investors, trading groups and professional advisers with any Italy-linked connection.

Nemo auditur propriam turpitudinem allegans — no one may rely on their own wrongdoing as a defence. The maxim, familiar to civilian and common-law lawyers alike, captures exactly what the Court of Justice of the European Union told sanctioned oligarchs and their advisers on 21 May 2026: you cannot construct a paper separation between a listed person and their assets and then ask a court to respect it. That principle now runs, with full legal force, through every port, customs hall, company registry and bank in Italy.

If you trade with Italian counterparties, hold assets through Italian-linked structures, or simply move goods through Italian territory, the 2026 rulings have materially changed your compliance exposure in ways most foreign advisers have not yet appreciated / grasped.

The CJEU rulings Italy handed to the world

The starting point is not Brussels or Strasbourg, but Rome. The Tribunale Amministrativo Regionale per il Lazio (the Regional Administrative Court of Lazio, Italy's primary administrative tribunal for the capital region) referred a cluster of asset-freeze disputes to the CJEU. On 21 May 2026, the CJEU issued two preliminary rulings in response to those referrals, providing important guidance on the application of EU asset-freeze measures in the context of trusts associated with persons designated under Council Regulation (EU) No 269/2014, the Russia Asset Freeze Regulation.

In Case C-483/23 (T Trust), the Italian Financial Security Committee had frozen the assets of four Italian companies on the basis that those assets were "indirectly attributable" to an individual on the Annex I sanctions list. The companies were ultimately owned through a Bermuda parent company, itself held in an irrevocable trust governed by Bermudian law. The settlor of that trust was later listed as a designated person. Critically, the settlor had been formally excluded from the group of trust beneficiaries shortly before his listing.

In the joined Cases C-428/24 and C-476/24, the first situation concerned the Italian company FZ AR, held indirectly by a trust established in Bermuda, whose original beneficial owner ZU was subsequently replaced by his spouse TU — both later designated — and in the second case, a yacht named "Sailing" located in Italy and held by company SX, itself controlled by a trust linked to TU.

The three rulings together establish a single working test: the freeze reaches trust-held assets wherever the sanctioned person retains, in law or in fact, the power to use those assets, to benefit from them, to dispose of them or to influence the trustee in relation to them.

Taken together, the rulings establish what analysts have described as a "substance-over-form test" for trusts under EU sanctions law. This reduces the utility of discretionary trusts, compliance clauses, layered offshore vehicles and nominee arrangements as shielding devices where factual influence persists. Where a listed settlor or beneficiary retains practical influence, economic enjoyment, decisive relational leverage or a realistic means of reaccessing the assets, those assets are liable to be frozen. A trust does not immunise assets merely because title is vested in a trustee or because the deed contains a compliance clause.

This matters acutely for Italy. The Italian Comitato per la Sicurezza Finanziaria (the Financial Security Committee, Italy's competent authority for implementing EU restrictive measures) is now armed with a CJEU precedent that it generated through its own enforcement action. It knows how to use it.

Why this differs radically from common-law jurisdictions

Unlike in most common-law countries — where a discretionary trust, properly constituted with an independent trustee and no retained powers, is generally treated as a complete legal separation between settlor and assets — EU sanctions law under Regulation 269/2014 applies an autonomous, EU-law concept of "ownership" and "control." That concept is not imported from Bermudian law, English trust law, or the codice civile (Italian Civil Code). It is defined functionally: if you can derive economic benefit, direct how the asset is used, or influence the trustee's decision in any material way, the asset is treated as yours for sanctions purposes.

A British trustee who points to the trust deed and says "the settlor has no rights here" will find that argument carries no weight with Italian enforcement authorities acting on this CJEU test. [sentence is cut off]s the starting point, not the ending point. Italian prosecutors and the Guardia di Finanza — Italy's financial police, which has primary investigative responsibility for sanctions circumvention — will look at the underlying relationship, correspondence, side letters, historical conduct, and the identity of those who actually issued instructions to the trustee.

Italy's new criminal sanctions law: what changed on 24 January 2026

The CJEU rulings do not operate alone. Italy approved Legislative Decree No. 211 of 30 December 2025, implementing Directive (EU) 2024/1226, which entered into force on 24 January 2026, significantly changing the criminal enforcement landscape in relation to EU sanctions violations.

Before this date, sanctions breaches in Italy were primarily administrative offences. Legislative Decree No. 211/2025 now increases criminal liability risks for companies operating in Italy under Legislative Decree 231/2001, as well as for natural persons. The Decree criminalises intentional violations of EU restrictive measures, criminalises negligent violations in specific circumstances, and does not introduce additional substantive sanctions prohibitions beyond those already in the EU sanctions framework.

The penalties are severe. The most serious violations are punishable by imprisonment from two to six years and fines from €25,000 to €250,000.

The truly significant change for foreign trading groups and multinationals is the extension of responsabilità da reato degli enti — entity-level criminal liability — under the pre-existing Legislative Decree 231/2001 framework. The Sanctions Decree amends Decree 231, expanding the list of predicate offences to include the new offences of "Violation of EU Sanctions", "Violation of reporting obligations", "Violation of authorisation conditions", and the new aggravated offence of facilitating immigration committed in violation of EU Sanctions.

On the question of corporate fines: fines range from 1% to 5% of global turnover for certain offences, or from €3 million to €40 million where turnover cannot be determined, and from 0.5% to 1% of global turnover for violations of Article 275-ter, or from €1 million to €8 million where turnover cannot be determined. Fines may also be increased by one-third in the event of repeated violations.

Note the calibration: the fine is calculated on global turnover, not Italian turnover. A UK or US parent with a modest Italian subsidiary will have its entire worldwide revenue in the denominator.

Circumvention: the enforcement priority that catches ordinary traders

The case-note angle above concerns structured asset-holding. But the parallel risk for ordinary trading companies is circumvention. Circumvention has become a central enforcement priority. EU regulations now explicitly prohibit conduct designed to circumvent restrictive measures, including the use of third-country intermediaries, shell companies or complex ownership structures to obscure the involvement of designated persons. Italian prosecutors and the Guardia di Finanza have increased their focus on transactions routed through non-EU jurisdictions that appear designed to avoid the direct application of EU measures.

On 23 April 2026, the EU adopted its 20th package of sanctions against Russia, contained in Council Regulation (EU) 2026/506, Council Implementing Regulation (EU) 2026/509 and Council Regulation (EU) 2026/511. The latest package introduced further restrictive measures spanning energy, shipping, trade, finance and anti-circumvention. For the first time, the EU activated its anti-circumvention tool, imposing destination-specific export restrictions aimed at preventing diversion of high-priority items to Russia, prohibiting in particular the export of computer numerical control (CNC) machines or radios to Kyrgyzstan, a jurisdiction identified as presenting systemic and persistent circumvention risks.

For a UK or Irish manufacturer shipping components through an Italian freight forwarder, "I did not know the end customer" is no longer an adequate answer. The EU has also strengthened rules on professional enablers — lawyers, accountants, consultants and trust service providers who assist in structuring transactions or corporate arrangements that facilitate sanctions evasion. Italian professionals in these categories face heightened scrutiny and are expected to apply enhanced due diligence when advising clients on cross-border transactions involving high-risk jurisdictions.

Gross negligence with respect to military or dual-use goods listed in Annexes I and IV of Regulation (EU) 2021/2018 now attracts imprisonment from six months to three years and a fine from €15,000 to €90,000. A trader who relied on a customer's self-certification of end use and made no independent checks is exposed.

What a foreign client must do now: a practical sequence

The first question to ask is structural. If you or your beneficial owner, investor, or counterparty has any connection to an offshore trust, holding structure, or intermediary that includes assets located in or transiting Italy, the three CJEU judgments require a full re-screening of that structure against the EU designated-persons lists. Formal exclusion from the trust deed is not sufficient. The Italian competent authority will look at who gave instructions, who received economic benefit, and who the trustee communicated with.

The second question is internal. Every company operating in Italy, or with an Italian subsidiary, must review whether its "Modello di Organizzazione, Gestione e Controllo" — the compliance model required under Legislative Decree 231/2001 — has been updated to include the new sanctions offences as predicate triggers. Legislative Decree No. 211/2025 marks the definitive inclusion of trade compliance within the core of corporate governance and corporate liability prevention. The ability of companies to integrate sanctions compliance safeguards into their organisational structures and 231 Models will become one of the key criteria by which the effectiveness of their prevention systems will be assessed.

The third question is transactional. Screen all Italian counterparties, freight agents, port operators, warehouse operators and professional advisers for any connection to designated persons or sanctioned entities. Businesses involved in international trade, logistics, financial services or crypto-related activities should carefully assess whether their counterparties, payment structures and supply chains could create sanctions risks. Particular attention should be paid to transactions involving third countries that maintain close economic ties with Russia.

The fourth question is procedural. Italy's Unità di Informazione Finanziaria (Financial Intelligence Unit, UIF) published guidance in May 2026 on the new criminal offences. On 7 May 2026, Italy's Financial Intelligence Unit (UIF) published a communication with guidance on the new offences criminalising activity related to the breach of EU restrictive measures. If you receive a query or demand from the UIF, the CSF or the Guardia di Finanza, the time to engage Italian-law counsel is immediately, not after providing a written response.

The deeper principle and what it signals

The T Trust litigation chain has produced a body of CJEU doctrine that will govern asset-freeze decisions across all 27 EU member states. But it was generated from Italy, by Italy's own enforcement actions, and it will be applied first and most aggressively in Italy. The CJEU did not invent the substance-over-form test; it confirmed that Italy's own enforcement authorities were correct to apply it. That institutional confidence will not go unnoticed in Rome.

The philosopher Jeremy Bentham observed that law is not what a sovereign commands in a text, but what courts and enforcement authorities actually do with it. What Italy's authorities have done — and what the CJEU has endorsed — is to make the economic substance of an arrangement, not its legal form, the decisive criterion. For foreign investors, trading groups and trustees, the practical implication is straightforward: if the underlying relationship has substance, the asset is at risk. Restructuring that relationship on paper, after a person is listed or listing is foreseeable, will be treated as circumvention, not as legitimate asset protection.

Italy's new criminal framework extends that logic from asset freezes to ordinary trade. Sanctions compliance in Italy is no longer a matter of ticking a box on an export licence. It is a board-level governance obligation with criminal consequences.

Image prompt: A wide-angle view of Genoa's container port at dusk, with rows of stacked shipping containers in muted blues and greys under a fading orange sky, and in the foreground a customs officer in a dark uniform examining documents beside a flagged freight lorry. The mood is tense and procedural, conveying lawful scrutiny rather than crisis. Photorealistic style, no text in the image.

Image file: eu-sanctions-italy-2026-trust-cjeu-cover

HREFLANG BLOCK:

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LANGUAGE QA: have not yet registered -> have not yet appreciated / grasped · it itself generated through its own enforcement decisions -> it generated through its own enforcement action · The formal document i -> [sentence is cut off] · this matters acutely for Italy -> this is particularly significant for Italy · a realistic pathway to re-access the assets -> a realistic means of reaccessing the assets · Together, the three rulings articulate a single working test -> The three rulings together establish a single working test · the events of 2026 have changed your compliance exposure -> the 2026 rulings have materially changed your compliance exposure · provides important guidance on the application of EU asset-freeze measures in the context of trusts associated with persons designated under -> addresses the application of EU asset-freeze measures to trusts linked to persons listed under

CHECK:
AUTHORITY 1: CJEU, Case C-483/23, T Trust, Judgment of the Court (First Chamber), 21 May 2026, ECLI:EU:C:2026:408
EXISTS? Yes — confirmed by EUR-Lex, CURIA press release No. 73/26 (21 May 2026), Morgan Lewis, Herbert Smith Freehills Kramer, Squire Patton Boggs, Brick Court Chambers, Kinstellar.
CONTENT MATCHES what I wrote? Yes — Italian-origin referral from TAR Lazio; four Italian companies; Bermuda trust; Swiss trustee; listed settlor formally excluded before listing; Italian CSF froze assets; CJEU confirmed freeze lawful applying substance-over-form test.

AUTHORITY 2: CJEU, Joined Cases C-428/24 and C-476/24 (FZ AR SpA and SX Ltd v Ministero dell'Economia e delle Finanze), Judgment of the Court (First Chamber), 21 May 2026, ECLI:EU:C:2026:409
EXISTS? Yes — confirmed by same sources as above plus Brick Court Chambers (full citation confirmed).
CONTENT MATCHES? Yes — Italian company FZ AR, yacht "Sailing" in Italy held by SX, Bermuda trust, designated person as beneficiary. CJEU upheld freeze.

AUTHORITY 3: Legislative Decree No. 211 of 30 December 2025 (published in Official Journal 9 January 2026, in force 24 January 2026), implementing Directive (EU) 2024/1226
EXISTS? Yes — confirmed by Baker McKenzie, Cleary Gottlieb, A&O Shearman, Studio Carbonetti, Lexology/Greenberg Traurig, CPO Partners, Lipani Legal.
CONTENT MATCHES? Yes — criminalises intentional and negligent sanctions breaches; imprisonment 2–6 years; fines €25,000–€250,000; extends Decree 231 predicate offences; global-turnover corporate fines 1%–5% /