A comprehensive investigation by Reuters has uncovered that Tesla employed international tax strategies that likely saved the electric vehicle manufacturer more than $400 million in U.S. taxes, contradicting public statements by CEO Elon Musk about avoiding questionable tax practices.
The Texas-based automaker reported owing zero federal taxes for 2025, according to its annual filing with U.S. regulators released in January. This continues a pattern spanning nearly two decades, during which Tesla has avoided paying federal taxes for all but one year despite generating $264 billion in U.S. revenue during that period.
While Tesla’s tax-free status partially stems from deductions related to years of losses before the company became profitable, along with federal green energy incentives, Reuters discovered an additional factor: Tesla subsidiaries in the Netherlands and Singapore recorded $18 billion in profits that escaped taxation in those nations.
The news agency examined thousands of pages of regulatory documents from Tesla and its subsidiaries across 14 countries in Europe, Asia, and North America. Reuters also conducted interviews with more than 20 financial analysts, automotive industry experts, academics, and tax professionals to reach its conclusions.
These findings contrast sharply with Musk’s public position on tax avoidance. During a campaign event with then-candidate Donald Trump in Pennsylvania last October, the billionaire entrepreneur stated: “I’m often pitched on these loopholes. I’m like, ‘That sounds pretty shady. I don’t think we should do that.’”
Tesla and Musk did not respond to multiple requests for comment from Reuters. The Internal Revenue Service also declined to provide a statement.
The investigation found no evidence that Tesla violated any laws. The practice of profit shifting, while controversial, represents a common strategy used by multinational corporations to reduce tax burdens by moving earnings to jurisdictions with more favorable tax treatment.
“It’s not the way the international tax system should work,” explained Stephen Shay, a former deputy assistant secretary for international tax affairs at the U.S. Treasury who now teaches at Boston College Law School.
Tesla’s profit-shifting strategy appears to have originated from a decision made early in the previous decade to transfer intellectual property rights, including patents and technical knowledge, to foreign subsidiaries. This move effectively allowed income that would have been subject to U.S. taxation to be recorded in countries with lower tax rates.
Corporate filings in Singapore reveal that Tesla Motors Singapore Holdings received approximately $18 billion in profits between 2023 and early 2025 from TM International, a Dutch subsidiary. TM International operates as a non-resident partnership under Dutch law, employs no staff, and pays no Dutch taxes.
Tax experts consulted by Reuters concluded that this partnership structure serves primarily as a financial conduit for income generated through Tesla’s intellectual property rights that were moved offshore.
“It’s entirely about shifting profits to low-tax jurisdictions,” said Reuven Avi-Yonah, a tax law professor at the University of Michigan.
Tesla has reported significantly higher tax obligations in foreign countries compared to the United States, despite the U.S. market historically representing the majority of its sales and still accounting for roughly half of its revenue. Since its 2003 founding, Tesla has reported $6.4 billion in foreign tax liabilities compared to just $48 million in estimated U.S. federal taxes for 2023 – the only year the company reported any potential U.S. tax obligation.
The profit-shifting mechanism likely traces back to a “cost-sharing arrangement” Tesla disclosed in its 2015 annual report, though the company provided no details about when this arrangement began or its intended purpose.
Tesla’s European operations are managed through Tesla Motors Netherlands, located in a modest building in southeast Amsterdam that houses a showroom, repair facility, and offices. In 2023 and 2024, this subsidiary reported annual revenues of $28 billion, representing nearly 30% of Tesla’s total revenue each year.
When a Reuters reporter visited the Amsterdam location, EU Finance Director Stephan Werkman explained that the corporate structure is controlled from Tesla’s headquarters. “Everything is decided in Austin,” Werkman said. “The tax structure is managed in the United States.”
Tesla’s most recent annual report suggests the company may have recently altered its offshore arrangements. The filing indicates that more than 90% of Tesla’s global profits in 2025 were earned in the United States, a dramatic increase from the previous five years when the U.S. accounted for only 27% of global profits.
Tax experts believe this shift could indicate Tesla has modified or discontinued the structure that previously allowed its Dutch and Singaporean subsidiaries to report billions in untaxed profits. However, they note that the existing arrangement has likely already reduced Tesla’s U.S. tax burden by at least $400 million, based on current corporate tax rates and the company’s profitability.
