Test 1: Do India hires conclude contracts?
If India-based staff have authority to bind your foreign entity in commercial contracts, this is the strongest PE trigger.
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Six tests Indian tax authorities apply to determine whether your global company has created a Permanent Establishment in India. PE creation triggers India corporate tax on attributable profits. Versatile Employer of Record removes PE exposure structurally.
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Used by 59+ global companies hiring engineers, designers, and operators in India
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Used by 59 companies hiring engineers, designers, and operators in India
Permanent Establishment (PE) is a tax concept under bilateral tax treaties (India-US, India-UK) that determines when a foreign company has a sufficient operating presence in India to be taxed on India-attributable profits at India corporate tax rates (currently 22-30% on a net basis). PE can be triggered by employees who conclude contracts in India, by a fixed place of business, or by a habitual agent. Most global companies do not realise they have created PE until an Indian tax notice arrives. Versatile Employer of Record removes the most common PE trigger structurally because the India employees work for Versatile, not for your foreign entity.
If India-based staff have authority to bind your foreign entity in commercial contracts, this is the strongest PE trigger.
For physical goods, India-held inventory in your name can create a fixed-place-of-business PE.
A leased office in your name, with your branding, used by India staff, is a fixed-place-of-business PE.
Direct employment by your foreign entity (without an Indian subsidiary or EOR) is a service PE trigger after 90+ days of presence.
Sales closing, customer-facing revenue work, contract execution. these are higher-risk than back-office engineering or research work.
Service PE risk increases sharply at 6+ months of sustained India presence.
| Item | Versatile handles |
|---|---|
| 0-1 tests pass PE side | Low PE risk. current structure is probably safe |
| 2-3 tests pass PE side | Moderate. review with India tax counsel |
| 4-6 tests pass PE side | High. switch to Versatile EOR or Indian subsidiary |
| How Versatile EOR removes PE risk | India hires are Foo Falcon employees, not your foreign entity's |
| Indian subsidiary alternative | Removes EOR-side PE but creates its own corporate tax + transfer pricing surface |
Versatile Employer of Record: India hires are Foo Falcon employees · Foreign entity has no India PE trigger from staff
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