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.