- Market entry into India, China, or the US can trigger broad tax and customs consequences across the supply chain, not just corporate setup; companies must align legal structure, transfer pricing, invoicing, logistics, and registration requirements.
- Permanent establishment thresholds differ materially: India can create a PE after 6 months for construction/assembly projects or 90 days for services; China uses a 183-day services PE threshold; the Germany–US treaty has no services PE, but other tax and state-registration rules still apply.
- Tax risk is not limited to PE status: withholding taxes on service fees, local tax registration obligations, customs exposure, and taxation of intra-group payment flows can all arise in the target country.
- A standalone incorporation is not enough; if transfer pricing, actual functions, and shipment/invoice flows do not match, the structure can become tax-inefficient and create both income tax and customs problems.
Source: bakertilly.de
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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