Elon Musk scorned “shady” loopholes, yet offshore tax tricks likely saved Tesla hundreds of millions

But a Reuters review of corporate filings by the company and foreign subsidiaries reveals another, previously unreported way of making big savings: Tesla units in the Netherlands and Singapore have made $18 billion in profits that went untaxed in those countries in recent years. Moreover, without the aid of a fiscal maneuver, these profits would likely have been reported and taxed in the United States. The analysis shows that this maneuver, a common corporate tactic known as profit shifting, likely saved more than $400 million in U.S. taxes.

Reuters reviewed thousands of pages of regulatory filings filed by Tesla and its subsidiaries in 14 European, Asian and North American countries, as well as transcripts of presentations and public statements by Tesla executives. The news agency also interviewed more than 20 stock analysts, auto industry consultants, academics and tax experts; among them are three U.S. tax experts who have testified before Congress more than a dozen times on such matters. Tax experts reviewed the Reuters ⁠ analysis and agreed that the conclusions and calculations regarding Tesla’s apparent profit transfer are realistic.
Big savings for Tesla Billionaire entrepreneur Elon Musk, the company’s CEO and largest shareholder, claims that his companies are not trying to avoid paying their fair share of US taxes. The centillionaire served as President Donald Trump’s government adviser last year and was openly concerned about the US federal budget deficit. While campaigning with Trump ahead of the 2024 election, Musk said he often rejected suggestions to avoid higher tax bills. “I often encounter these gaps,” he told an audience in Pennsylvania that October. “I said, ‘This looks pretty suspicious. I don’t think we should do this.'”

Neither Tesla nor Musk responded to calls or emails from Reuters seeking comment for this report. The Internal Revenue Service, the U.S. tax authority, did not respond to requests for comment.

Reuters found no indication that Tesla’s tax practices violated any laws. And Tesla won’t be the first company to shift profits abroad.

Although controversial, the practice is a common maneuver in which multinational corporations exploit loopholes in tax laws to save money by shifting profits from one jurisdiction to another with more favorable tax rules. “That’s not the way the international tax system works,” said Stephen Shay, a former assistant secretary for international tax affairs at the U.S. Treasury and now an adjunct professor at Boston College Law School. Shay is one of three leading tax experts consulted by Reuters about Tesla’s tactics.

Tesla’s profit shifting appears to follow its decision early last decade to grant intellectual property rights, such as patents or know-how related to its products, to one or more foreign subsidiaries. This move in effect would allow the profits to become taxable in the US, as the intellectual property is headquartered in the US, and remit the income from its use to a jurisdiction where it is less taxed.

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Tesla has not publicly acknowledged the profit shift or explained what purpose its Dutch and Singaporean units serve in terms of tax planning.

But regulatory filings in Singapore show that a subsidiary there, Tesla Motors Singapore Holdings, made profits of about $18 billion between 2023 and the beginning of 2025 from TM International, a Dutch unit whose Singapore subsidiary owns more than 99%. TM International, one of several Tesla units based in the Netherlands, is registered with Dutch authorities as a non-resident “partnership”. No employees are listed and they are not required to submit financial statements or pay Dutch taxes, records show.

Neither the Dutch nor Singapore filings provide detailed information about the partnership’s activities, its relationships with sister units that manufacture and distribute Tesla products, or how and where the partnership’s profits are derived. Filings in Singapore show that Tesla Motors Singapore Holdings is not taxed there on income from the partnership.

A spokesman for the Tax Administration, the Dutch tax authority and the Singapore Revenue Authority, the country’s tax authority, declined to answer questions about Tesla’s taxes. Both cited privacy rules that prevented any comments.

Because of the structure of Tesla’s overseas subsidiaries and the large profits the partnership has reported, experts consulted by Reuters said the partnership almost certainly exists because of Tesla’s decision to move some of its intellectual property rights offshore. They said the partnership fulfilled little purpose beyond serving as a financial conduit for revenue earned by exercising those rights.

“This is all about shifting profits to low-tax areas,” said Reuven Avi-Yonah, a University of Michigan tax law professor. Two other tax experts consulted by Reuters — Shay, a former Treasury Department official, and Stephen Curtis, a Denver-based economist who advises the U.S. Justice Department — agreed with the assessment.

“EVERYTHING WAS DECIDED IN AUSTIN”

Due to the complexity of tax laws and the different disclosures required in different jurisdictions, tracking the cross-border movement of a multinational company’s profits can be challenging even for experts and tax authorities. Tracking Tesla’s earnings and associated tax liabilities is no exception.

Tesla has reported estimated annual tax liability to the US government for only one year since its founding in 2003. On this occasion, the company announced that it expects to owe $48 million to the federal government for 2023. It is not clear in regulatory filings or other documents reviewed by Reuters what makes 2023 different or what the forecast reflects.

It was also not possible to determine whether Tesla actually paid this $48 million before 2025 or whether it made other tax payments to the federal government. Until a regulatory change last year, U.S. companies were required to report only an annual estimate of taxes owed, not the actual taxes after they were paid. Final amounts paid each year may also differ from estimates in regulatory filings because tax credits or liabilities may be applied after an estimate is reported.

Still, regulatory filings show that over the years, Tesla has reported much larger tax liabilities abroad than in the United States, even though sales in the U.S. market have historically dominated its revenue and still account for about half of its revenue despite recent gains in foreign markets. According to the documents, Tesla has reported $6.4 billion in foreign tax liabilities since its founding; That’s more than 130 times the $48 million single U.S. tax estimate it reported for 2023.

One reason for this may be a move made years before Tesla became profitable, which likely set up the mechanism that enabled the Dutch and Singaporean units to generate $18 billion in untaxed profits.

Tesla disclosed in its 2015 annual report that it had entered into a so-called “cost-sharing agreement” with its undisclosed overseas subsidiaries. Neither the report nor other documents reviewed by Reuters explain exactly when the edit was made or its intended purpose.

Both the US Congress and the IRS have argued that these regulations could be tools for tax avoidance. Microsoft, for example, is fighting the IRS’ claim that the company owes more than $28 billion in taxes in 2023 related to profit shifting. The company denied wrongdoing.

Most of Tesla’s foreign operations are managed through Tesla Motors Netherlands, a subsidiary based at 122 Burgemeester Stramanweg, a gray and red metal-clad building in southeast Amsterdam. The modest property, adorned with Tesla logos, includes a vehicle dealership, a repair shop and several offices. In 2023 and 2024, the last years for which figures are available, Tesla Motors Netherlands reported annual revenues of $28 billion; This corresponds to almost 30% of the parent company’s total turnover in those years.

The filings and other documents reviewed by Reuters do not make clear how or how much of those revenues came from profits reported by the Singapore unit’s Dutch partnership.

When a Reuters reporter stopped by the Amsterdam building last year, an executive who identified himself as Stephan Werkman said the entire company structure was run from Tesla headquarters an ocean away. “Everything was decided in Austin,” he said, standing next to a Model X with its gullwing doors open. “The tax structure is administered in the United States.”

Werkman’s LinkedIn profile lists his title as “EU Chief Financial Officer.”

There was a possible hint in Tesla’s latest 10-K, the annual report it filed with U.S. regulators in January, that Tesla may have recently ended regulation that allowed its Dutch and Singaporean subsidiaries to report billions of dollars in profits. On page 84 of the report, Tesla announced that more than 90% of its global profit in 2025 was made in the USA. For the previous five years (starting with 2020, the first full year the company reported a profit), the US accounted for just 27% of global profits, according to Tesla’s period reports.

The Jan. 10-K does not explain why the percentage increased or identify any changes in Tesla operations or earnings that would explain it.

Tax experts consulted by Reuters said one reason for this could be Tesla’s change to its offshore structure, which creates profits for its Dutch and Singaporean subsidiaries. The news agency could not yet determine whether such a change would affect the two units’ recent revenues.

Even if halted, the regulation likely helped Tesla reduce its U.S. tax burden by at least $400 million, tax experts said. The figure is based on a 21% corporate tax rate, Tesla’s continued profitability, and accumulated tax breaks the company has not yet implemented. Because profit shifting has reduced the U.S. tax bill in recent years, these deductions remain available when Tesla owes taxes to the federal government.