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12 July 2013
The Uttarakhand High Court recently ruled that as long as an employer is a non-resident, the country of residence is not relevant under Article 16(2) of the India-Denmark double tax avoidance agreement.
Dismissing the revenue authorities' appeal, the court upheld the Income Tax Appellate Tribunal's decision that salary income earned by Maersk employees assigned to India was not taxable in India under the agreement, since the employees' stay in India was for less than 183 days and the remuneration was not paid by the permanent establishment or fixed base of the non-resident employer.
The court further observed that the fact that the employer was a resident of the United Kingdom and not Denmark was irrelevant for treaty relief, so long as the employer was a non-resident. However, the court noted that it is important to check that remuneration is not paid by the Indian permanent establishment, where such an establishment or fixed base exists.
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