Elon Musk has chosen the tax-friendly jurisdiction of the Netherlands to route its Tesla India investment. Tesla Motors Amsterdam is the parent company for Tesla Motors and Energy, India, the company’s incorporation documents showed.
Tesla India Motors and Energy Private Limited has been incorporated and the registered address is in Lavelle Road, Bengaluru on January 8, with ₹15 lakh authorized capital and ₹1 lakh paid-up capital.
In an interview with Bussiness Insider, Sridhar Ramachandran, a tax partner at Grant Thornton Bharat said, “The India Dutch treaty has been seen as a good treaty for capital gains exemption for lower withholding tax on dividend and lower withholding tax on interest.”
Ramachandran also highlighted that the Dutch domestic laws provide a fair bit of advantage from a tax planning perspective. The companies gain an edge in the rates for dividend taxes and withholding taxes if they choose to invest via the Netherlands.
Rajesh Gandhi, partner, Deloitte India, expressed his thoughts as reported by Economic Times. He said that with the amendment of India’s tax treaties with Mauritius and Singapore, there are hardly any choices for getting capital gains tax exemption on FDI transactions and that the India-Netherlands treaty stands out because it exempts capital gains from tax where India shares are sold by the Dutch company to a non-Indian buyer.
As per the experts. this corporate structure in India would offer Tesla tax benefits related to capital gains and dividend payments.
Tesla’s choice is an exception to the general trend in the auto industry. MG Motors entered India in 2017 invested via China, which is also the home jurisdiction for its parent company SAIC Motors. Similarly, India’s investments in KIA Motors came from South Korea, which is also the corporate home of KIA Corp. A mailed query sent to Tesla remained unanswered.
