Delhi High Court’s EY Ruling Signals Need for Multinationals to Reassess Secondment Structures: Vipin Upadhyay in Bloomberg Law

The Delhi High Court’s recent ruling in the Ernst & Young LLP case could have far-reaching implications for multinational companies operating in India, particularly those relying on cross-border employee secondment arrangements.

Commenting on the development in Bloomberg Law, Vipin Upadhyay emphasized that multinational enterprises should undertake a comprehensive review of their tax positions concerning employees assigned to India, including the transfer pricing implications of such arrangements.

The High Court held that reimbursements made by Indian entities to a foreign affiliate for the salaries of seconded employees could constitute Fees for Technical Services (FTS), making such payments taxable in India. The ruling has introduced fresh uncertainty around a long-debated aspect of international taxation and is expected to prompt businesses to revisit their existing secondment frameworks.

Reflecting on the broader impact of the judgment, Vipin Upadhyay observed that if reimbursements are treated as consideration for cross-border affiliate services, they would need to be priced in accordance with transfer pricing principles. He further noted that the ruling is likely to have a significant impact on a large number of multinational corporations with operations in India.

The judgment is expected to influence how multinational groups structure employee deputation arrangements, allocate employment responsibilities, and document intercompany transactions. Businesses may also need to reassess whether their existing agreements appropriately reflect the operational and commercial realities of secondments in light of evolving judicial interpretation.

Vipin also noted that the issue is yet to attain finality, indicating that the legal position may continue to evolve as the matter progresses through the appellate process.

Read the full article here: https://news.bloombergtax.com/financial-accounting/ey-india-tax-ruling-raises-flags-on-affiliate-worker-assignments 

Last Updated on 1 August, 2026