Movement of Employees - Secondment
Areas to be considered
Where there is movement of employees on secondment, we need to look at the following aspects:
Types of PE:
- Whether proper documentation is in place (Viz., secondment / deputation agreements) in order to mitigate permanent establishment (PE) exposure which may otherwise lead to taxing of global income in India by way of profit attribution;
- Withholding tax implications;
- Social security obligation w.r.t the employees travelling
Key Points to be noted
- The employees travelling should be on the payroll of the other entity to avoid Service PE implications.
- Service by employee or other personnel constitutes to PE if services last beyond a period aggregating more than 90 days within any 12 month period . The 90 day period is replaced by 30 days in case of a related party.
- To avoid the same it should be ensured that the employees are on the payroll of other entity while during secondment.