Fixed Place PE (Control and Substance over Form)

The Supreme Court of India¹ (“SC”) has affirmed the ruling of the Delhi High Court² (“Delhi HC”), holding that Hyatt International Southwest Asia Ltd. (“Hyatt International”), a UAE-based company, had a fixed place Permanent Establishment (“PE”) in India under Article 5(1) of the India-UAE Double Taxation Avoidance Agreement (“DTAA”). The SC focused on the substance of the arrangement, concluding that Hyatt International’s pervasive operational control over the Indian hotels, owned by Asian Hotels Limited, India (“AHL”), created a fixed place PE.

•  The SC held that the test for a fixed place PE is not merely physical access but whether the premises are operationally ‘at the disposal’ of a foreign enterprise to conduct its business.
•  The Court endorsed a substance-over-form approach, looking at the combined effect of (i) the Strategic Oversight Services Agreement (“SOSA”) between AHL and Hyatt International; and (ii) the Hotel Operating Services Agreement (“HOSA”) between AHL and Hyatt India Pvt. Ltd. (“Hyatt India”), Hyatt International’s Indian affiliate to determine the true nature of control.
•  Per
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