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Indian perspectives on PEs
Few sports have a higher profile globally than Formula 1. Few issues are higher profile globally in the world of tax than those surrounding the concept of permanent establishment. The two collided in spectacular fashion recently in front of the Supreme Court of India. In determining whether Formula One World Championship Limited had a permanent establishment in India the court addressed difficult issues including to what extent one can conflate the legal rights and activities of related parties in the analysis, the relevance of the fact that an activity is temporary (three weeks) but regularly repeated (in this case annually), and the extent and impact of control exercised by the non-resident over the physical sight.
The analysis of the Supreme Court of India in the case of Formula One World Championships Limited is reviewed by BMR Taxand India.
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Consistent with the international commentary on general principles underlying determination of fixed place PE, the SC has held that if the place of business is fixed, permanence of such place is to be evaluated having regard to the nature of business. The fact that duration of business activities carried out through such fixed place may not be substantial in absolute sense, is not really material; so long as taxpayer has exclusive and repetitive access, and such access is permanent relative to the nature of business, place of business can be deemed as fixed place PE.