India Permanent Establishment risk quiz.
Seven questions assess whether your India operations trigger Permanent Establishment (PE) tax liability under tax treaties. OECD tests. Takes 2 minutes. No email wall.
Question 1 of 7
Do you have India employees reporting to your foreign entity?
How PE risk is assessed by treaty.
Fixed place of business PE
A dedicated office or facility in India that your foreign entity controls, uses for business, and maintains for a year or more. Shared spaces or virtual presence do not trigger this PE.
Dependent agent PE
An India employee who has authority to conclude contracts binding your foreign entity, and regularly exercises that authority. Independent contractors or negotiators who do not bind your entity do not create this PE.
Service PE (OECD Article 5b)
Furnishing services in India for over 183 days in a 12-month period, including by employees or related entities. Permanent EOR removes this by shifting India staff to the local employer.
Worked example
The seven answers combine into a low, moderate, or high permanent establishment risk verdict, with the reasoning behind each factor shown alongside the result.
PE risk quiz, answered.
Questions about Permanent Establishment under India tax treaties.
What is Permanent Establishment under India tax law?
PE is defined in India-US, India-UK and other bilateral tax treaties. Once PE is triggered, your foreign entity becomes liable for India corporate tax on profits from India operations, at rates 22 to 30%. OECD tests cover fixed place of business, dependent agents, and services PE.
Does EOR structurally protect against PE?
Yes for the most common trigger: India staff directly employed by your foreign entity. With EOR, India staff are employees of the local Indian entity (Versatile), not of your foreign entity. PE risk from employees shifts to the local entity, which is already subject to India corporate tax.
What PE triggers does EOR not prevent?
EOR does not prevent (1) fixed-place-of-business PE if you lease a dedicated India office in your foreign entity name; (2) dependent-agent PE if India staff conclude binding contracts on behalf of your foreign entity. You need a local subsidiary or careful operational controls for these.
Do I need India tax counsel?
Yes, for any engagement above 3 to 4 India hires or any work tied to India revenue. Versatile coordinates with India tax counsel partners and can introduce you to specialists in your jurisdiction.
When is a PE quiz the wrong tool?
When you own material India revenue streams or plan a long-term product office. At that scale, you need a full India tax audit covering transfer pricing, GST, and treaty alignment. Speak to us for a structural recommendation.
Longer reading: EOR in India: PE and tax strategy · EOR services in India · Related tool: EOR vs entity calculator
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