Secondment Agreement Tax Implications

Multinationals often assign their employees abroad to perform certain assigned tasks, provide technical assistance or provide employees with qualification opportunities, etc. Reimbursement of the wage costs of these “second jobs,” unless carefully structured, can have serious tax consequences for both the Indian subsidiary and the overseas business. It can therefore be concluded that the mere provision of services to the Indian unit to maintain global standards or to support its day-to-day work by Members of Parliament does not constitute a service organisation in India. However, positions are optimized when they make important decisions or when they manage key functions for the company. In this regard, it is very important to note that the Tribunal`s interpretation tends more towards “substance” than towards the “form” of detachment. Even if such a provision faces tax risks for the foreign employer, the foreign employer is not obliged to forego secondment. The Canada Revenue Agency has an administrative position regarding payment to a lender of up to $250 per employee per month for overhead costs related to a secondment. The Canadian Financial Agency has the administrative position that such an administrative levy does not result in the repayment (including the administrative community) paid by the recipient employer being subject to a 15% withholding tax in accordance with Section 105 of the Income Tax Regulation. It is customary for foreign companies (the employer) to send foreign workers on a form basis for subsidiaries in China, where the worker maintains his employment relationship with the foreign employer, but provides services to the Chinese subsidiary. The main advantage of the secondment agreement over the subsidiary`s direct entry into a working relationship with foreign workers is that it avoids the regulation of Chinese employment contract law, which is favourable to workers. Section 102 of the Income Tax Regulations requires resident and non-resident employers to withhold and pay taxes on Canadian wages on amounts paid to non-resident workers for work done under the Canada.In of the detachment, the lender employer, the recipient employer or both businesses, in order to withhold and return Section 102. Sanctions and interest are assessed for non-compliance.

Normally, the employer receives the transfer to the Canada Revenue Agency.

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