Management Uti Dominus and Tax Assessment: The Cassation Court's Analysis in Order No. 28971/2025

In the complex landscape of Italian tax law, the line between legitimate management of a capital company and its instrumental use for tax avoidance purposes is often the subject of heated disputes. A recent ruling by the Court of Cassation, Order No. 28971 of November 3, 2025, sheds new light on the figure of the *uti dominus* manager, i.e., someone who de facto manages a company as if they were its absolute owner, and on the severe tax consequences that arise in terms of direct taxes and VAT.

Interposition and Income Shifting

The case examined by the Supreme Court concerns the challenge brought by the Tax Administration against D. D., accused of managing a capital company in such a way as to make it a mere screen for his personal business activities. According to established case law, when a company is entirely subservient to an interposing party, income shifting occurs: profits formally attributed to the company are legally attributed to the de facto manager, as the real possessor of such sums.

In matters of VAT and direct tax assessment, pursuant to art. 37, paragraph 3, of Presidential Decree No. 600 of 1973, the income shifting and related taxes are determined against the individual who managed a capital company *uti dominus*, as the effective possessor of the income of the interposed company. Furthermore, a mandate without representation relationship is established, where the agent is the *uti dominus* manager and the principal is the company. Therefore, if the services in which the former participated on behalf of the latter are subject to VAT, the legal relationship between the agent and the interposed company is also subject to VAT. The burden of proof lies with the tax administration to demonstrate, even by circumstantial evidence, the total subservience of the interposed company to the interposing party, and with the taxpayer to provide contrary proof of the absence of interposition or the non-receipt of income by the interposed entity.

This maxim clarifies a fundamental point: the law does not stop at formal appearances. If an individual acts as a *dominus*, tax law recognizes them as the effective recipient of the income. The technical reference to a mandate without representation (ex art. 1705 of the Civil Code) is interesting, as it serves to justify taxation also for VAT purposes on the internal relationships between the manager and the shell company, ensuring that the entire value chain is correctly taxed.

The Burden of Proof Between Presumptions and Counter-Evidence

A crucial aspect of Order No. 28971/2025 concerns the distribution of the burden of proof. This is not a simple task for the tax authorities, nor for the taxpayer seeking to defend themselves against such accusations. The Court clearly specifies the necessary steps to legitimize the assessment:

• The Tax Administration: must demonstrate, even through simple presumptions (serious, precise, and consistent indications ex art. 2727 of the Civil Code), that the company was totally subservient to the manager and lacked its own management autonomy.
• The Taxpayer: has the burden of providing counter-evidence, demonstrating that there was no fictitious interposition, that the company operated autonomously, or that, even if there was de facto management, they did not actually receive the disputed income.

This evidentiary structure is based on the general principle of the burden of proof enshrined in Article 2697 of the Civil Code, adapted to the needs of combating tax avoidance as provided for by art. 37 of Presidential Decree No. 600 of 1973.

Conclusions on the Liability of the De Facto Manager

The Supreme Court's decision reiterates a principle of substantial transparency: those who hold effective control and enjoy the economic fruits of an activity cannot hide behind the corporate veil of a company to evade taxes. For de facto directors, the risk is not only an administrative penalty but the complete re-assessment of their personal income with tax rates often much higher than corporate rates. This order serves as a warning to anyone operating in the market through corporate structures lacking real decision-making autonomy, confirming that the effectiveness of income possession always prevails over the legal form used.