Global Mobility: Secondment, Transfer & Intra-Company Transfer

By Dev Rao | Updated March 2026

What Is Global Mobility?

Global mobility refers to the structured movement of employees across international borders for work assignments. For foreign companies expanding into India, global mobility encompasses three primary mechanisms: secondment (temporary deputation while retaining home-country employment), local transfer (full transfer to the Indian entity's payroll), and intra-company transfer (ICT) (movement between related entities under a group structure). Each mechanism triggers a distinct set of immigration, tax, FEMA, and social security obligations.

India is one of the most active recipients of inbound global mobility assignments in Asia. The country's regulatory framework — spanning the Income Tax Act, 1961, FEMA, 1999, the Immigration Manual, and bilateral social security agreements — creates a multi-layered compliance environment that foreign companies must navigate carefully. Getting the structure wrong can result in permanent establishment (PE) exposure, TDS default penalties, FEMA contraventions, and immigration violations.

In January 2026, India and the EU signed a landmark Comprehensive Framework for Cooperation on Mobility, with pilot quotas for ICT professionals expected by mid-2026 — signaling India's growing integration into global talent mobility frameworks.

Legal Basis

• Immigration: Employment Visa Rules (Ministry of Home Affairs) — Foreign nationals working in India require an Employment Visa, which mandates a minimum salary of USD 25,000 per annum. For stays exceeding 180 days, registration with the FRRO/FRO within 14 days of arrival is mandatory.
• FEMA, 1999 and FEMA (Current Account Transactions) Rules, 2000 — Governs salary payment mechanics for seconded employees. RBI A.P. (DIR Series) Circular No. 62 (January 22, 2015) permits foreign nationals deputed to Indian group companies to maintain foreign currency accounts abroad and receive salary directly, provided Indian income tax is paid on accrued salary.
• Income Tax Act, 1961 — Section 5, 6, 9, and 192 — Section 9(1)(ii) deems salary to accrue in India when services are rendered in India. Section 6 determines residential status (182-day threshold). Section 192 mandates TDS on salary by the employer.
• DTAA Article 15 (Dependent Personal Services) — Most of India's DTAAs provide that salary is taxable in the state where employment is exercised, subject to the short-stay exemption (183-day rule with three cumulative conditions).
• Social Security Agreements — India has bilateral SSAs with 18 countries (Belgium, Germany, Switzerland, Denmark, Luxembourg, France, South Korea, Netherlands, Hungary, Finland, Sweden, Czech Republic, Norway, Canada, Japan, Austria, Portugal, and Australia). These provide for Certificate of Coverage to avoid dual social security contributions.

Secondment vs. Local Hire vs. Contractor

The choice of mobility structure has profound tax, immigration, and legal consequences. Here is a comparative analysis:

Intra-Company Transfer (ICT) Visa and Immigration

India does not have a separate ICT visa category like the EU's Intra-Corporate Transfer Permit or the UK's Global Business Mobility visa. All foreign nationals working in India — whether on secondment, local transfer, or ICT — require an Employment Visa. Key requirements:

• Minimum salary: USD 25,000 per annum (including all allowances and perquisites such as rent-free accommodation). This threshold is calculated on total compensation, not just cash salary.
• Employer sponsorship: The Indian entity must sponsor the visa application with a letter confirming the employment relationship, compensation, and duration.
• Qualification requirements: The foreign national must be a highly skilled professional — typically holding a managerial, executive, or specialist knowledge position. The visa is not granted for roles that Indian nationals can fill.
• FRRO registration: For visas exceeding 180 days, registration with the Foreigners Regional Registration Office within 14 days of arrival is mandatory. Failure to register carries a penalty of up to INR 500 per day of overstay.
• Duration: Employment Visas are typically issued for 1-5 years with multiple entries, extendable within India.

India-EU Mobility Pact (2026)

The Comprehensive Framework for Cooperation on Mobility signed in January 2026 introduces pilot quotas for ICT professionals from EU member states. While implementing guidelines are pending (expected mid-2026), this pact is expected to create a more predictable processing timeline for EU nationals on intra-company assignments to India.

FEMA Compliance for Salary Payments

FEMA compliance is one of the most nuanced aspects of global mobility in India. The rules differ based on the direction of payment and the employee's status:

Inbound Secondment (Foreign Employee Working in India)

Per RBI A.P. (DIR Series) Circular No. 62 dated January 22, 2015, foreign citizens deputed to Indian group companies may:

• Open and maintain foreign currency accounts outside India
• Receive their entire salary by credit to such foreign accounts
• Alternatively, receive salary in India and remit to foreign accounts

The critical condition: income tax must be paid on the entire salary as accrued in India under the Income Tax Act. The Indian entity must ensure TDS compliance under Section 192 on the full compensation — even if the salary is paid abroad by the foreign parent.

Outbound Assignment (Indian Employee Sent Abroad)

Indian employees on outbound assignments can receive salary abroad under the Liberalised Remittance Scheme (LRS) framework, subject to the USD 250,000 per financial year limit for current account transactions. Salary credited to an NRE account upon acquiring non-resident status is freely repatriable.

PE Risk from Employee Secondments

One of the most significant — and often overlooked — risks of inbound secondments is the creation of a permanent establishment for the foreign company in India. Under Article 5 of most DTAAs and Section 92F of the Income Tax Act, a PE arises when:

If a PE is established, the foreign company becomes liable to Indian corporate tax at 40% (plus surcharge and cess) on profits attributable to the PE — a dramatically higher exposure than the mere salary tax cost of the secondment. The ICAI's revised Technical Guide on Expatriates Taxation (2025 edition) specifically flags PE risk from global mobility arrangements as a priority compliance area.

Mitigating PE Risk

• Ensure the secondee reports to and is supervised by the Indian entity, not the foreign parent
• Do not authorize the secondee to negotiate or sign contracts on behalf of the foreign parent
• Limit assignment duration to below the service PE threshold in the applicable DTAA
• Structure the secondment as a genuine transfer of employment functions, not a service arrangement

Tax Implications: Who Bears the Cost?

The tax treatment of secondment costs has been one of the most litigated areas in Indian tax law. The core question: is the salary reimbursement from the Indian subsidiary to the foreign parent a payment for "services" (taxable as fees for technical services) or a mere cost recharge (not taxable)?

• Department's position: Salary reimbursement is consideration for making skilled manpower available — taxable as FTS under Section 9(1)(vii) at 10-15% under most DTAAs, requiring TDS under Section 195.
• Taxpayer's position: The Indian subsidiary is the real employer; the foreign parent merely facilitates salary payment. Reimbursement at cost without markup is not "income" of the foreign parent.
• Judicial trend: The Bangalore ITAT in multiple cases (including Target Corporation India Pvt. Ltd.) held that genuine cost-to-cost reimbursement of seconded employee salaries is not taxable as FTS, provided the Indian entity controls the employee's work. The Supreme Court in Eli Lilly supported this view.

Social Security: Certificate of Coverage

India has bilateral social security agreements with 18 countries. These agreements allow seconded employees to remain in their home-country social security system for a defined period (typically 3-5 years) by obtaining a Certificate of Coverage (CoC). Without a CoC, the employee faces dual contributions — home-country social security plus Indian Provident Fund (currently 12% employer + 12% employee on basic wages up to INR 15,000/month, though many MNCs contribute on full basic salary).

For employees from countries without an SSA with India (notably the US and UK, where agreements are under negotiation), dual contributions are currently unavoidable unless the employee qualifies for EPF exemption as an "international worker" under specific conditions.

Common Mistakes

• Treating the secondment as a service contract instead of an employment arrangement. If the Indian entity characterizes the secondment as procurement of "services" from the foreign parent (even inadvertently through intercompany agreement wording), it triggers FTS withholding at 10-15% on the entire reimbursement — far exceeding the TDS on salary. Draft secondment agreements to clearly establish the Indian entity as the economic employer.
• Not obtaining a Certificate of Coverage before the assignment starts. CoC applications to the home country's social security authority can take 4-8 weeks. If the employee begins work in India without a CoC, the Indian entity must deduct Provident Fund contributions from day one. Retroactive CoC issuance may not result in automatic PF refunds.
• Assuming a Business Visa is sufficient for short-term secondments. Business Visas do not permit "employment" in India. Even a 2-week assignment where the employee performs productive work (not just meetings or training) requires an Employment Visa. Immigration violations carry penalties including deportation and future visa denial.
• Ignoring PE risk from senior executive secondments. A seconded CFO or Sales Director who negotiates contracts on behalf of the foreign parent in India can single-handedly create an Agency PE — exposing the foreign company to 40% corporate tax on attributed profits. Restrict contract-signing authority to Indian entity personnel.
• Failing to align FEMA, tax, and immigration documentation. The visa application states one salary figure, the secondment agreement states another, and the Form 15CA/15CB for remittance shows a third. Inconsistencies across regulatory filings are a red flag for both the Income Tax Department and FEMA enforcement.

Practical Example

Meridian Technologies GmbH, a German enterprise software company, establishes Meridian India Pvt Ltd as a wholly-owned subsidiary. To launch operations, Meridian GmbH seconds three employees to India:

Employee 1 — Klaus Weber, Technical Architect (24-month assignment):

• German salary: EUR 95,000/year (approximately INR 87,40,000 at INR 92/EUR)
• India housing allowance: INR 1,20,000/month (INR 14,40,000/year), paid by Meridian India
• Total India-taxable compensation: INR 1,01,80,000
• Indian tax (new regime, with 10% surcharge + 4% cess): approximately INR 28,50,000
• Germany-India SSA: Certificate of Coverage obtained — Klaus continues German social security; no Indian PF required
• Meridian India runs shadow payroll, deposits TDS monthly, issues Form 16

Employee 2 — Anna Richter, Sales Director (12-month assignment):

• Same compensation structure as Klaus
• Critical PE risk: Anna negotiates and signs contracts with Indian clients on behalf of Meridian GmbH
• Result: Agency PE triggered under Article 5(5) of the India-Germany DTAA
• Consequence: Meridian GmbH must file an Indian corporate tax return and pay 40% tax (plus surcharge and cess) on profits attributable to the PE — potentially INR 2-5 crore depending on contract values
• Fix: Restructure so Anna signs contracts as authorized signatory of Meridian India Pvt Ltd, not GmbH

Employee 3 — Thomas Braun, Project Manager (90-day assignment):

• Duration: Under 183 days
• DTAA short-stay exemption claimed under India-Germany DTAA Article 15(2) — all three conditions met (under 183 days, salary paid by German employer, not borne by Indian PE)
• Indian tax: Nil (exemption applies)
• Shadow payroll: Not required, but Meridian India maintains documentation of Thomas's days in India for audit purposes

Key Takeaways

• India uses a single Employment Visa for all global mobility mechanisms — there is no separate ICT visa category, and a Business Visa does not permit employment
• Secondments create the highest PE risk for foreign companies; restrict secondees' contract-signing authority to the Indian entity
• FEMA permits foreign-paid salary for deputed employees via foreign currency accounts, provided Indian income tax is fully paid
• Salary reimbursement structured as cost-to-cost recharge is generally not taxable as FTS, per Supreme Court precedent — but intercompany agreement wording is critical
• India has SSAs with 18 countries; obtain Certificate of Coverage before the assignment to avoid dual social security contributions
• The India-EU Mobility Pact (January 2026) will introduce streamlined ICT processing for EU nationals — implementing guidelines expected mid-2026

Structuring employee secondments or intra-company transfers to India? Beacon Filing provides payroll processing, immigration coordination, and FEMA compliance for foreign companies deploying talent to India.