Service Permanent ESTABLISHMENT PE

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Germany Co operates India operation thru one Indian Agent under exclusive Freelancer Agreement. He participates and corresponds with Indian importers on behalf of Principal  who take final price call.

Is it Service PE for DTAA purpose.

Please guide

Replies (1)

While the formal title of a "Freelancer Agreement" is used, the exclusive nature of the relationship and the active role in managing importer correspondence present a significant Agency PE risk. Indian courts and tax authorities frequently look past the contractual label to the actual degree of authority and commercial dependence. It is highly recommended to have a professional audit of the agency agreement and the actual day-to-day operations to ensure they align with the "preparatory or auxiliary" safe harbor limits defined in the India-Germany DTAA.

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