Tesla relies heavily on subsidies to lower the hefty price tag of its cars for buyers, but in Europe it may have found a new way to do that. Denmark authorities believe the U.S. firm is trying to dodge taxes by taking unfair advantages of a tax break, says a report from local publication DR.
Tesla accused of avoiding taxes
In Denmark, about 2,500 luxury electric cars have come up for registration in a small period of time. Though there is not anything suspicious in this, the fact that these EVs came from registration just before the expiration of a tax break in the country raises suspicion. Denmark’s Minister for Taxation, Karsten Lauritzen, suspects Tesla is trying to defraud the Danish government.
“Bulk buying cars with intent of selling them is illegal. It’s not possible to think that there are 2500 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,” Lauritzen said.
Denmark authorities are in the process of making a major tax change. On Sept. 29, authorities announced that Tesla would be subjected to the same tax laws as other luxury car makers. This implies that starting in 2020, a 100% registration tax will be levied on the sale of a new Model S. So far, Tesla has been able to avoid this massive tax fully. With the new tax, the Model S price will rise from 50,000 kroner ($97,233) to around 1.8 million kroner ($269,262). The registration tax will be implemented in phases. In 2016, the tax will be 20% and will see a yearly rise to 40%, 65% and 90% before hitting 100% in 2020.
Is Tesla’s move justified?
Tesla spokesman Esben Pedersen, who initially rejected the allegations of Tesla being involved in the bulk registration of cars, later admitted that the company was involved in the purchase. Pedersen told DR that he has come to know thata “there has been someone in our headquarters, sitting and ordering number plates for all markets.” Justifying the move, Pedersen said demand for the car has increased after the announcement of the tax change.
Commenting on the tax break, Tesla previously said the rise in the tax rate was “not a phasing-in of levies on electric cars but rather a phasing out of electric cars in Denmark it.” The U.S. firm also plans to challenge the tax change in the EU court.