Fashion brand, representative office in Milan

A contemporary fashion brand based in New York, with five years of activity and positioned in the premium segment, whose women’s collection has quickly gained international visibility. The brand is distributed through a network of buyers and department stores across Europe, with Italy as its second-largest market after the United States, and regularly participates in trade fairs and presentations during the Milan fashion weeks.

Relations with the Italian market are managed from the U.S. headquarters: wholesale orders are handled through independent showrooms in Milan, production is partly entrusted to manufacturers in Tuscany and Veneto, and fabric development takes place with suppliers in Como. The growth of the European business makes this remote management increasingly unsustainable: delays in communication with suppliers, the inability to supervise production quality in real time, and difficulties in cultivating relationships with Italian buyers and the press without a stable local presence. The brand’s founder and creative director, a U.S. citizen, intends to relocate to Milan to personally direct European operations, bringing with her a British assistant.

In this case, the Law Firm would adopt an approach centered on the proper legal and tax qualification of the office, building around it a coherent and defensible migration, contractual, and operational structure.

1. Structuring of the representative office
   • In-depth analysis of the activities to be carried out by the Milan office, with each activity classified as either auxiliary or potentially commercial: supplier coordination (auxiliary), quality supervision (auxiliary), participation in trade fairs (auxiliary), negotiation with buyers (commercial, to be excluded), conclusion of contracts (commercial, to be excluded)
   • Preparation of an internal operating regulation precisely defining the limits of the Milan office activities: exhaustive list of permitted functions, escalation procedures to the US headquarters for any commercial decision, express prohibition on entering into contracts
   • Registration of the secondary establishment with the Milan Companies Register as a representative office carrying out auxiliary and preparatory activities, with a limited corporate purpose consistent with the adopted qualification
   • Preparation of defensive documentation (advance ruling request or supporting memorandum) to demonstrate the auxiliary nature of the office in the event of an audit by the Italian Revenue Agency
2. Immigration strategy
   • Structuring of the creative director relationship as an intra corporate transfer from the US parent company to the Milan office, consistent with the qualification of the office as a secondary establishment and with the maintenance of the employment relationship with the US company
   • Preparation of the application for an intra corporate transfer residence permit, with supporting documentation: secondment letter, job description consistent with the auxiliary activities of the office, evidence of professional qualifications
   • Parallel management of the immigration process for the British assistant: subordinate work visa, with clearance from the Immigration Office (Questura) and coordination with the Italian Consulate in London
   • Planning of post arrival formalities for both: residence permit, tax code, registration with the local municipality
3. Tax planning and risk prevention
   • Structuring of financial flows between the parent company and the representative office: the office operates exclusively as a cost centre, funded by the US company for operating expenses (rent, personnel, utilities), without generating its own revenues
   • Analysis of the risk of a personal permanent establishment linked to the presence of the founder: formal definition of the limits of her powers within the Milan office, with explicit exclusion of authority to conclude contracts on behalf of the US company in Italy
   • Structuring of the creative director remuneration consistently with the secondment: maintenance of US payroll, with possible cost of living adjustment for Milan, in compliance with the Italy US Double Tax Treaty to avoid double taxation on employment income
   • Preparation of Italian filing obligations for the secondary establishment: branch accounts, communications to the Chamber of Commerce, tax compliance limited to the nature of a representative office
4. Contracting in the fashion sector
   • Review and restructuring of agreements with Milan showrooms: formalisation as mandate without representation agreements entered into by the US company, with the Milan office acting as operational contact point but not as contractual party
   • Restructuring of contracts with manufacturers in Tuscany and Veneto: retention of contractual ownership by the parent company, with clauses defining the Milan office role as quality supervisor and production coordinator without decision making powers
   • Preparation of contract templates for relationships with new suppliers and collaborators, consistent with the office qualification and usable by the Milan team without risk of encroaching on commercial activity
   • Review of agreements with European buyers and department stores to ensure that no clause attributed to the Milan office any role in the conclusion or performance of sales contracts
5. Operational launch
   • Identification and negotiation of premises in the Milan fashion district or surrounding areas, with verification of permitted use and compatibility with private showroom activities for presentations to press and buyers
   • Opening of an Italian bank account in the name of the secondary establishment, with anti money laundering compliance documentation prepared by the Law Firm
   • Activation of utilities, certified email registration (PEC) and filings with the Companies Register
   • Assistance with integration into the Milan fashion professional network: guidance on key industry service providers (PR agencies, photographers, pattern makers, independent showrooms) and fashion week timelines

“In our sector, Milan is not an option, it is a necessity. The suppliers are here, the buyers come through here, the fashion weeks are here. But when we started to understand what was required to open an office, we realised that the risk was not in the visible bureaucracy, but in what we did not know we did not know. The boundary between representation and permanent establishment, the type of visa for someone like me who is not a standard employee, the showroom contracts that had to be structured in a specific way, every detail had implications we would never have grasped on our own. The Law Firm built a structure that allows us to do everything we need to do in Milan, without ever crossing the line. After one year, the office operates exactly as planned and we have not faced a single challenge.”