As US-based electric car maker Tesla Inc plans its India entry this year, it has taken a tax-friendly jurisdiction route. The route taken by Elon Musk-led Tesla will allow it to avail benefits on capital gains and dividend payments. Also, the European country’s strong intellectual property (IP) framework will allow Tesla to bring the latest technology to the country.
The company’s incorporation documents reveal its India unit, Tesla Motors and Energy, India, has a parent company based in Amsterdam, Tesla Motors Amsterdam, The Economic Times reported. The Netherlands-based company, Tesla Motors, is the subsidiary of California-based Tesla Inc.
The Netherlands offers favourable tax rates and strong IP protections, thus attracting global companies, especially from the US, to route investments via the European country.
The tax treaties between India and the Netherlands allow companies to get capital gains tax exemption if shares of an Indian firm are sold to a non-Indian entity. The investments coming from the Netherlands also attract lower dividends as well as withholding taxes.