Foreign Company Looking to Establish Business in India



Float a Subsidiary

A subsidiary is a company whose voting stock is controlled more than 50% by another company. Opening a subsidiary would be one of the best options for a foreign company to establish a business in India.

Liaison Office

A place of business to act as a channel of communication between the principal place of business or head office, by whatever name called and entities in India, but which does not undertake any commercial/trading/industrial activity, directly or indirectly, and maintains itself out of inward. They can’t perform or take up activities to earn income in India and their expenses are to be met using the foreign inward remittance made by the parent company.

Project Office

A project management office, is a group or department within a business, agency or enterprise that defines and maintains standards for project management within the organization. However, their existence is subject to the time required for completion of the project. They have a certain compliances which need to be followed.

Appointment of employees in India on the basis of Secondment

Secondment is a temporary transfer of an employee to another position or employment. The employees are on the payrolls of one company but are working for another. This avoids service PE implications and hence prevents taxation of parent company in India.

Don’t’s

  • Do not appoint employees having employee-employer relation with parent company as it may result in service PE implications. Service PE would make the income attributable to such employees earned by the parent company taxable in India.
  • Do not run like a branch as it may result in transfer pricing implications.