For organising the distribution of goods in foreign countries, agency is the simplest form being used by many multinationals. Therefore, this form of commercial agency is being frequently used for international trade practices. To have agents abroad and to work with them, it is required to have a well drafted agency agreement. In light of different laws applying to different jurisdictions and absent any uniformly applying set of rules in international transactions, it is commonplace to be baffled about what kind of agreement should be drawn while appointing an agent for sale/ distribution of goods or services in a foreign jurisdiction.
This article is aimed to provide preliminary information that may be helpful for Foreign Corporations to appoint an ‘Agent’ in India for selling products in India and also Indian Corporations that desire to appoint an ‘Agent’ in overseas jurisdiction for selling products or services. Specific laws applying to country of residence of principal and country of residence of agent will be required to be examined at the time of drafting an actual agency agreement. Devising an International Agency is not simply a matter of Commercial Contract drafting. Apart from the same, it has got issues pertaining to International Taxation and Planning which should be properly addressed so as to ensure that tax litigation does not arise in future and could be dealt with properly. This guide may be treated only as a general piece of advice and for specific advice, tax lawyer and/ or a firm dealing in matters of Commercial Contract Drafting must be consulted. Should your needs arise from areas of Ahmedabad, Delhi, Mumbai or Bangalore, we may be able to directly help you.
Amongst others, aspects pertaining to (1) Points to be covered in International Agency Agreement (2) Risk of creating a Permanent Establishment that may expose foreign corporation to unwanted tax obligations in India and (3) Rights of Representative Assessee (Agent) to retain any sum payable to Foreign Principal, are specifically relevant while devising an International Agency and covered in this Article.

Author of this article:
Adv. Ravish Bhatt,
Partner, R&D Law Chambers,
Dual Qualified Lawyer Solicitor | International Tax Affiliate

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