The move would be “an exception” from general trend, experts noted, pointing out other global automakers entered the India market did so through their Asian subsidiaries.
Elon Musk’s California-headquartered Tesla Motors will invest in India through its Dutch subsidiary, The Economic Times reported from documents it accessed.
Experts told the paper that Tesla Motors Amsterdam being the parent company of Tesla Motors and Energy India will give the auto company tax benefits related to dividend payments and capital gains.
Moneycontrol could not independently verify the report.
The move would be “an exception” from general trend, experts noted, pointing out other global automakers entered the India market did so through their Asian subsidiaries – e.g. MG Motors 2017 entry in India was done through China.
Tesla did not respond to queries, the report said.
Netherlands offers favourable tax rates and has a strong intellectual property (IP) protection framework making it a “top choice” for United States companies.
The country also have a treaty with India which exempts capital gains from tax when Indian shares are sold by Dutch companies to non-Indian buyers, Rajesh Gandhi, partner with Deloitte India noted.
He pointed that the Netherlands is now a lucrative choice as India’s tax treaties with Singapore and Mauritius were amended and do not provide these benefits.
Other experts also noted that dividend rates and withholding taxes are lower for investors coming from Netherlands. They, however, noted that tax avoidance is “no longer simple as countries are coming up with anti-avoidance laws.”