25 June 2018 India rules management of client's hotel creates fixed place PE The taxpayer (Taxpayer), a foreign company and a tax resident of Luxembourg, entered into various agreements with an Indian company (I Co), the owner of a hotel (Hotel) in India, to provide multiple services (such as reservations, human resources, technical, consultancy, and procurement) in relation to the operation and management of I Co's Hotel. The Authority for Advance Rulings (the AAR) held that the Taxpayer has a fixed permanent establishment (PE) in India at I Co's Hotel through which the Taxpayer conducted its core business activities, i.e., the operation and management of the Hotel. The Hotel is at the disposal of the Taxpayer since it has absolute control, authority and responsibility over the operations and management of all vital and important functions of the Hotel. Consequently, income earned by the Taxpayer through such an arrangement is taxable as "business profits." Document ID: 2018-1293 |
