Who counts as the employer during a secondment?
For treaty purposes the question is economic rather than contractual. If the host entity directs the work, decides what the person does day to day, bears the cost of their pay and carries the risk of their performance, the arrangement looks like host employment even where the home company still issues the payslip. That matters because the relief that exempts short host working generally depends on the employer not being in the host country. A letter that leaves the point ambiguous invites each country to answer it in its own favour.
Does our assignment letter change the employee's treaty position?
It is often the main evidence for it. The assignment letter records who employs, who directs the work, who bears the cost and who bears the risk — the same four facts a treaty analysis and a host payroll examination turn on. Authorities read it against what actually happened, so a letter describing an arrangement nobody followed is worse than a short accurate one. Drafting it as a tax document, at the point the assignment is agreed, costs far less than reconstructing the facts from old emails two years afterwards.
Can a secondment create a permanent establishment for the home company?
It can, depending on what the seconded person does and for whom. Where staff remain the home company's employees, work on the home company's account, and carry out its business in the host country, the arrangement can look like the home company operating there in its own right rather than lending people to a group member. The wording of the secondment agreement, the recharge of cost, and the reporting lines the person actually follows all bear on it. This is a separate exposure from the employee's own tax position, and it sits with the company.
What should a secondment agreement say about who bears the cost?
It should say plainly which entity bears the cost of the assignee, whether that cost is recharged, and what the recharge covers. Silence is the problem: where nothing is stated, the paper trail is whatever the intercompany ledger happens to show, and that is frequently inconsistent with the letter. The cost-bearing fact drives the treaty analysis, the host payroll position and often the transfer pricing treatment of the recharge, so all three should be settled on one set of facts rather than separately by three different teams.
Why have both countries assessed tax on the same secondment?
Usually because the economic employer was left ambiguous and each authority resolved the ambiguity its own way. The host reads the arrangement as host employment and taxes the compensation locally; the home country carries on treating the person as its employee and taxes the same pay. Nothing in the documents settles it. Fixing the position afterwards means establishing what actually happened — direction, cost, risk, reporting lines — and asserting one consistent answer in both countries on the same evidence, rather than filing whatever each local adviser prefers.
Is an intercompany recharge enough to prove the economic employer?
On its own, no. A recharge is one fact among four, and it is the easiest to contradict: an invoice moving cost to the host entity does not help if the letter says the home company bears it and the assignee reports to a home manager throughout. A useful position has the agreement, the recharge and the working reality all saying the same thing. Where they do not, either correct the documents to match what happens or change what happens to match the documents, before an authority makes the comparison for you.
What is a totalization agreement and how do I use one?
A social security agreement that stops you contributing to two systems for the same work, and lets periods in both count towards benefit eligibility in either. Which system you stay in depends on the agreement's rules for your situation — a seconded employee usually remains in the home system for a set period, a locally hired one usually joins the host system. You evidence it with a certificate of coverage obtained before or shortly after the assignment starts. See certificates of coverage.
Does a remote employee create a permanent establishment?
It can. One employee working from home in another country may be enough where the arrangement gives the company a fixed place at its disposal, or where that person habitually concludes contracts. Seniority and function matter more than headcount: a salesperson closing deals is a far greater risk than a developer. The exposure is corporate tax and payroll registration in that country, which is why it is worth testing before the hire rather than after. See PE risk review.
