Why Tesla Is Routing Its India Foray Via Amsterdam

Tesla Inc TSLA is routing its Indian foray through Amsterdam, The Netherlands — a move that sets it apart from fellow automakers who have recently marked their entry into the South Asian country, the Economic Times reported Monday.

What Happened: The Elon Musk-led company’s move is related to tax benefits on capital gains and dividend payments, as per experts, according to Indian media.

The corporate structure would make the automaker's Dutch subsidiary, Tesla Motors, the parent of Tesla Motors and Energy India, as per incorporation documents seen by the Economic Times.

“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,” said Deloitte India partner Rajesh Gandhi, as per Economic Times.

“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, said Sridhar Ramachandran, tax partner at Grant Thornton’s Indian operations, Business Insider reported.

Why It Matters: The Indian arm was incorporated — with INR 1.5 million ($20,502) authorized capital and INR 100,000 ($1,367) paid-up capital. The company’s registered address is in Bengaluru in southern India.

Tesla’s methods are different from both China’s SAIC and Hyundai Motor Company HYMTF subsidiary KIA Motors — relatively recent entrants in the market — which chose to invest in India through their respective home countries, as per the Economic Times.

See Also: Tesla Gets Regulatory Nod To Begin Sales In Israel: Report

The Palo Alto-based EV company could begin to take orders in India for its Model 3 sedan as early as this month, according to comments from India's transport minister.

Price Action: Tesla shares closed nearly 2.2% lower at $826.16 on Friday and fell almost 0.3% in the after-hours session.

Click here to check out Benzinga’s EV Hub for the latest electric vehicles news.