- Court Ruling on Permanent Establishment: On January 15, 2025, the Delhi High Court ruled that the secondment of employees from a South Korean entity to its Indian subsidiary does not create a fixed place of business or a Service Permanent Establishment (PE) in India under the India-South Korea tax treaty.
- Independent Operations: The court emphasized that the Indian subsidiary operates as an independent legal entity conducting its own business, and the presence of seconded employees was limited to facilitating subsidiary activities, without impacting the South Korean entity’s global operations.
- Service PE Rejection: The High Court dismissed the tax authorities’ claim that seconded employees were providing services on behalf of the South Korean entity, concluding that these employees were solely at the disposal of the Indian subsidiary, and thus, there was no Service PE in India.
Source EY
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