Does an LLP with a foreign partner have to file the FLA return?
Yes. The annual return of foreign liabilities and assets is filed with India's central bank by Indian companies and LLPs that received foreign investment or made overseas investment in any year, so the limited liability partnership form does not put an entity outside it. This surprises people because the return is often described as a company filing. What matters is whether foreign investment came in or an overseas investment went out, not the legal wrapper the Indian entity uses. We establish that first from the capital account and the partners' contributions, and only then look at which years are in scope.
Do we file the FLA return in a year with no new investment?
Yes, and this is the single most frequent gap we are asked to clear up. The return is due annually for as long as the foreign investment exists, including for years in which nothing happened, which is exactly when it is forgotten. A quiet year still has a foreign holding on the balance sheet, and the return reports the position rather than the transaction. Companies that file only in the years they issue shares or receive funds end up with an inconsistent history, and that history is what gets examined later. The test is the existence of the investment, not activity during the year.
We only invested abroad and took no foreign money. Does FLA apply?
It does. The return covers both sides: Indian companies and LLPs that received foreign investment and those that made overseas investment in any year. Owners who think of it as an inbound filing assume an outbound-only structure is outside it, and that is the assumption we correct most often on this filing. The assets half of the return exists for precisely this case. If an Indian entity holds a subsidiary, a joint venture or another investment outside India, that holding is reportable for as long as it exists, in the same annual rhythm as an inbound holding.
Is the FLA return a tax return?
No. It is a regulatory filing rather than a tax one, made to India's central bank, and that distinction changes who has to hold the deadline. A tax accountant working only from the tax calendar will not see it, and an entity in a nil tax position, or one carrying losses, is not taken out of it by that position. The obligation follows the existence of the foreign investment. We treat it as part of the same annual cycle as the tax filings for practical reasons, because both draw on the same accounts, but they are separate obligations with separate consequences.
Do we still file FLA after the foreign investor has exited?
The annual obligation runs for as long as the foreign investment exists, so the year in which it ceased and the years before it still need to be examined properly rather than written off. What the entity's records show at the reporting point is the question, and an exit part-way through a period is not the same as never having had the investment. We establish the position year by year from the share register or capital account, file what is outstanding for the years the investment existed, and give the client a written note of the date from which the filing genuinely stops.
Nobody told us about the FLA return. How many years do we file?
As many as the investment has existed and the return has not been filed, because each year is a separate annual return rather than a single cumulative one. That is good news and bad news at once: the backlog is finite and can be worked out precisely from the records, but it does not collapse into one filing. We start by fixing the year the foreign investment first arose, list every year since, and then match that list against what has actually been filed. The gap that comes out of that exercise is the work, and the fee for it is agreed in writing before it starts.
Do I have to file in both countries?
Frequently yes, and the two filings do different jobs. The country where the income arises taxes it at source; the country where you are resident taxes your worldwide income and then gives credit for the tax already paid. Filing only one side is what leaves relief unclaimed — the credit has to be asked for on a return. We prepare both sides so the numbers agree. See dual filing.
I work remotely from another country for a company back home — who taxes me?
Usually the country you are physically in, because employment income is generally sourced where the work is done, with your residence country taxing it as well if you are resident there and giving credit. Three things follow: your employer may acquire withholding and social security obligations where you sit, a treaty tie-breaker may be needed if both countries call you resident, and a short trip that becomes a long stay can cross a residence threshold nobody was watching. See remote workers and digital nomads.
