Renowned fashion designers Domenico Dolce and Stefano Gabbana were given a reduced, suspended sentence of 18 months in jail on Wednesday.
The duo's conviction on charges of hiding hundreds of millions of euros from Italian tax authorities via Luxembourg holding company Gado was upheld.
The sentence was reduced from 20 months because the statute of limitations applied to certain facts in the case. Still, it took the twosome off guard.
A lawyer for Dolce and Gabbana, who have always denied any wrongdoing, said they would appeal the decision: "I am speechless. We are all shocked.
A Milan prosecutor had asked the court in March to clear the pair, who closed the Milan shops where they sell clothes inspired by Dolce's native Sicily.
The previous decision, by a lower court, handed the duo suspended jail sentences of 20 months each and imposed a fine of up to 10 million euros.
The case stems from an investigation that began in 2008 when authorities stepped up their fight against tax evasion as a global financial crisis began to bite.
Fashion companies have fallen under the scrutiny of Italy's tax authorities partly due to the fact the sector has performed well despite a prolonged recession.
Similarly, Giorgio Armani paid 270 million euros to tax authorities in early April to settle a dispute over payments from the group's subsidiaries abroad.
Prada Holding, which controls Prada, paid a reported 400-420 million euros to settle taxes in Italy after completing a process of voluntary disclosure in December.