Handle Social Security Law on Secondments Without Prejudicing Corporate Tax Positions!! Balancing Benefit under 'Social Security Agreements' with 'Double Taxation Avoidance Agreements'

Abstract

Seconding an employee to an Indian company can have significant tax implications for all three entities i.e. foreign company seconding the employee, the employee itself and the Indian company. Besides tax, the social security laws have a bearing on the secondment model. Employees generally want their legal employment as well as Social security contributions to continue with foreign company especially by availing the benefit of SSA entered into between India and many countries. This article discusses the risk of creating a Permanent Establishment in India if the benefit of SSA is availed without proper planning.

Keywords: Social security agreement, SSA, Permanent establishment, Service PE, Secondment