Where should an Indian subsidiary of a European group have its immediate parent – in Greece or in Cyprus?
Legal and tax implications
AMA's analysis involved a host of issues, from the overarching considerations (legal perception of each country among India's regulators and transfer pricing regulations applicable) to the minutiae (withholding tax rates, double-tax avoidance agreements with Greece and Cyprus, the concept of permanent establishment, etc.).
We also studied the documentation requirements for transactions with both countries as well as structuring of operational arrangements such as reimbursement of costs from parent entity, allocation of costs between subsidiary and parents, etc.
Our work required extensive analysis of the Indian, Greek and Cypriot tax regulations as well as Double-Tax Avoidance Agreements. Our work also required a review of current transactions in place and their treatment for transfer pricing purposes. Finally, we carried out scenario analysis using hypothetical figures to assess the difference between the two European jurisdictions from a tax perspective, both for the payer and the payee company.
The results of our work were presented to the client in a report covering our methods, analysis, hypothetical calculations and a recommendation.
The client chose to adopt our recommendations and has post-facto been satisfied with our recommendation. AMA has thereafter continued to assist the client with advisory services around transfer pricing and tax matters.
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