Free diagnostic · State of India EOR 2026
Does Your India EOR Hire Trigger Permanent Establishment Risk?
Ten questions. Four minutes. You walk away with a PE-risk tier, the legal factor most likely to fail an Indian tax assessment, and the post-2025 case-law citations a tax assessor would actually cite.
Scoring applies the four-part PE test under Section 9, Income Tax Act 1961 and Article 5 of India’s tax treaties. Indicative diagnostic. Not a substitute for tax counsel.
Asanify · State of India EOR 2026
Does Your India Hire Create Permanent Establishment Risk?
Ten questions, four minutes. Get your PE-risk tier and the legal factor most likely to fail Indian tax scrutiny. Grounded in post-2025 ITAT, Supreme Court, and Delhi HC precedent.
Currently scoped to India hiresIndicative diagnostic. Not legal or tax advice. PE determinations are fact-specific and turn on the totality of an arrangement, including documents and oral evidence the quiz cannot see. Consult qualified Indian tax counsel before acting on this output. Case-law citations are summary references. Verify against primary sources.
Why this matters now
Most foreign companies hiring through EOR in India are fine. The Indian EOR is the legal employer, payroll runs through an Indian PAN, and the foreign principal stays clean of Indian corporate tax. That is the Booking.com pattern. In February 2026, ITAT Delhi quashed a Rs.3,960 crore demand on Booking.com B.V. on exactly that ground: no place of business, no personnel, no agents, no equipment in India.
The trouble starts when the EOR contract is not the whole story. A parallel advisory agreement between the hire and foreign HQ. A foreign-controlled office. A sales role that negotiates contracts in India even if signature happens abroad. Each one is a thread an Indian assessing officer can pull on.
The July 2025 Supreme Court decision in Hyatt International tightened the test. Continuous and systematic use of another entity’s premises in India is enough for Fixed-Place PE, even without a formal lease. In December 2024, ITAT Bangalore held in QlikTech International AB that customer identification, price negotiation, and contract finalisation by an Indian seat created a Dependent-Agent PE, and only an arm’s-length transfer-pricing remedy on the same income flow knocked the separate attribution down.
The quiz codifies the four PE tests Indian courts have actually applied in the last twenty-four months. It tells you which factor in your arrangement is most likely to fail, before an assessor does.
The four tests this quiz applies
Functional role
Customer-facing or internal? Revenue-influencing or back-office?
Anchor: Morgan Stanley (SC 2007)
Contract authority
Who concludes, negotiates, or materially influences contracts?
Framework: OECD BEPS Action 7, MTC Art. 5(5)
Day-to-day control
Foreign HQ or an India-resident manager directing daily work?
Anchor: Hyatt International (SC July 2025)
Economic substance
Is there a place of business, equipment, or personnel of the foreign principal in India?
Anchor: Booking.com (ITAT Feb 2026)
Frequently asked questions
My EOR provider says I’m safe. Why does this matter?
“EOR shields you from PE” is the marketing line. The case law from the last twenty-four months is more nuanced. Booking.com survived because there was no place of business, no personnel, no agents. Hyatt lost at the Supreme Court in July 2025 on a fact pattern that began as a service arrangement. QlikTech triggered DAPE attribution despite a clean Indian subsidiary. EOR helps, but the structure has to hold up under the four-part test the courts now apply. The quiz tells you which factor is closest to the line.
Does using an EOR in India protect against PE?
Often, yes. A clean EOR structure where the Indian EOR is the sole legal employer, where the foreign client has no parallel contract with the hire, and where the hire performs internal-facing work has survived scrutiny under the Morgan Stanley framework. EOR is not a magic shield. If the hire negotiates contracts in India, runs a customer-facing function, or works out of an office the foreign company controls, PE can still attach.
Will this quiz tell me whether I’ll be audited?
No. Indian tax assessments are triggered by a wider set of signals than any external scoring tool can read, and the AO’s view turns on document trail and oral evidence the quiz cannot see. What the quiz does is flag the factors that Indian tribunals have actually weighed in 2024 to 2026 case law. If the quiz shows your arrangement is in High or Critical tier, a 30-minute review with corridor-experienced counsel is the right next step.
What is the OECD November 2025 50% safe harbour, and does India follow it?
The OECD’s November 2025 Model Tax Convention update introduced a quantitative threshold for remote-work PE. If an employee spends less than 50% of working hours at a foreign location over a rolling twelve-month period, that location is generally not treated as a Fixed-Place PE. The threshold is a meaningful clarification but not a blanket safe harbour. India has not yet adopted this OECD position by statute, so for Indian PE analysis the position is persuasive guidance, not binding rule.
Can transfer pricing fix a PE problem?
Sometimes. ITAT Bangalore in QlikTech (December 2024) held that arm’s-length compensation for the Indian seat extinguishes separate Dependent-Agent PE attribution. The remedy works only if the TP study is robust and the compensation actually arm’s-length. It is not a structural fix. It is an income-attribution fix that buys time, not certainty.
Is this a substitute for tax advice?
No. The quiz is an indicative diagnostic, not legal or tax counsel. PE determinations are fact-specific and turn on the totality of an arrangement, including documents and oral evidence the quiz cannot read. Use the output to focus the conversation with Indian tax counsel, not to replace it.
Read the full State of India EOR 2026 report
The PE Risk Quiz is one section of a deeper analysis of the India EOR corridor, the post-Hyatt regulatory shift, and what the new case law means for foreign principals hiring through Indian EOR.
Read the report