PE Risk & Profit Attribution
Permanent establishment is the transfer pricing risk that arrives unannounced. A sales director who habitually negotiates contracts from Mumbai, seconded employees whose home-office reporting lines never really moved, a warehouse that quietly became a distribution hub, servers and agents and service teams — any of these can create a taxable presence for the foreign parent in India, with profits attributed to it and returns, interest, and penalties following. The exposure builds silently across years and surfaces in a single assessment notice.
We assess PE exposure across every theory Indian authorities deploy — fixed place, dependent agent, service PE, and the expanding digital nexus — against what your people and assets actually do, not what the org chart says. Where risk exists, we restructure arrangements to mitigate it: contracting authority, employment structures, and activity boundaries redrawn with substance. Where a PE is unavoidable or already exists, we build attribution positions that keep the taxable profit defensible and the compliance manageable.
What this covers
- PE risk assessment across fixed-place, agency, service, and digital theories — grounded in travel data, contracts, and conduct.
- Secondment structuring: the arrangement Indian courts have scrutinised most, done in a way that survives scrutiny.
- Mitigation restructuring: authority matrices, contracting models, and activity relocation with real substance.
- Profit attribution studies where a PE exists — because the finding is only half the dispute; the quantum is the other half.
- Litigation support on PE assessments, from assessment through appellate stages.
Who needs this
Foreign companies with employees, agents, or infrastructure regularly operating in India; groups running secondment programs; and parents whose Indian subsidiaries perform functions that shade into the parent's business.
How we deliver
- Exposure assessment built from travel records, contracts, and decision-making patterns — evidence, not assertion.
- Mitigation restructuring implemented with documented substance, not paper reorganisation.
- Ongoing monitoring as teams, roles, and business models shift the risk surface.
Why A2 Consultants
PE disputes are fact battles, and we prepare facts before they are contested — clients who restructure on our assessments enter any future proceeding with a documented record built years ahead of the notice.
Engagement & what to expect
Assessments run three to six weeks: travel data, contracts, and decision-making patterns analysed against every PE theory Indian authorities deploy, concluding in a risk map with exposure quantified per arrangement. Where mitigation is warranted, restructuring follows — authority matrices, contracting models, and secondment terms redrawn with documented substance. Where a PE exists or is asserted, attribution studies and defense strategy take over. Many multinationals move to an annual PE review cadence, because the risk surface shifts every time teams, roles, and reporting lines do.
PE risk is cheapest to fix before the assessment notice names it — audit your exposure while restructuring is still an option.