Cross-border secondment arrangements have once again come under tax scrutiny following a recent Delhi High Court ruling, which held that reimbursement of salary costs of seconded employees (even without any markup) constituted “Fees for Included Services” under the India-USA tax treaty. The decision of this Court differs from earlier significant rulings by treating the foreign entity as the real and economic employer of the secondees and concluding that the secondment arrangement satisfied the “make available” condition under the tax treaty. The ruling has significant implications for multinational groups operating cross-border secondment arrangements, as it may increase their tax exposure and associated costs. This note analyzes the decision, draws contrast from the existing jurisprudence and highlights key considerations for structuring and implementing cross-border secondment arrangements.
