Tesla Motors in suspected tax dodge manoeuvre

13 Nov 2015


With a tax break about to expire, the Danish government observed this week that Tesla Motors was going to extraordinary lengths to take advantage of current tax law.

Danish tax minister Karsten Lauritzen initially accused the car manufacturer of buying its own cars to benefit from tax subsidies as it planned to resell the cars later at a profit.

Lauritzen later said, he had received a satisfactory explanation from the company.

Tesla said it delivered 11,580 vehicles in the third quarter, meeting its target after chief executive officer Elon Musk handed over the first Model X sport utility vehicles just before the end of the period.

Current laws allow incentives for the popular Model S which includes exemptions from green taxes and exemptions from the vehicle registration tax. The vehicle registration tax would expire at the end of 2015 or barely which was only 47 days away.

Without the exemption, the cost of the Model S would increase from about 650,000 kroner ($97,233 US) to around 1.8 million kroner ($269,262 US).

According to the Danish government, the three-fold price increase, created the perfect opportunity to manipulate pricing, which was what Lauritzen alleged was happening.

Lauritzen said, 2,500 electric cars, which were ''most likely Teslas,'' were recently registered in the country.

Lauritzen said ''Bulk buying cars with intent of selling them is illegal.'' He went on to add, ''It's not possible to think that there are 2,500 Danes, who have had this idea over a matter of a few weeks, but I think it's fair to say this was done to partially circumvent the rules.''

The news, which was sourced from a Danish outlet, was translated in a post on reddit.

The suspicion that Tesla Motors was dodging taxes comes ahead of a major change in the way that Danish authorities add taxes to the car.

Denmark announced on 29 September that Tesla Motors would be subject to the same tax regime as other luxury car makers, which meant  a massive 100-per cent registration tax would be levied on each sale of a new Model S from 2020.

Earlier the Model S had avoided that tax altogether. With the new tax policy, while the price of the car in the country was set to rise from its current low of 650,000 kroner, or $93,468, gradually over the coming years, the registration tax would touch 20 per cent in 2016, with a yearly increase to 40 per cent, 65 per cent, 90 per cent and finally 100 per cent in 2020.

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