Tesla reported a federal tax bill of zero dollars for 2025, continuing a pattern in which the company has owed the US government almost nothing for all but one of the past 20 years, despite reporting total US revenues of $264 billion over that period.
The conventional exclamation points to loss carryforwards and green energy tax incentives. What a Reuters review of corporate filings across 14 countries made visible in April 2026 is a second mechanism: Tesla units in the Netherlands and Singapore recorded approximately $18 billion in profits between 2023 and early 2025, profits that were not taxed in either jurisdiction, and tax experts estimated the arrangement saved Tesla more than $400 million in US federal taxes. That disclosure has triggered a formal Dutch government investigation into Singapore’s tax rules and, according to tax experts, should logically extend to Switzerland, where Tesla has since repositioned its Dutch entities under a new corporate layer.
The structure that produced those untaxed profits has a specific legal character. TM International, one of several Tesla units based in the Netherlands, is registered with Dutch authorities as a non-resident partnership, lists no employees, is not required to file financial statements, and does not pay Dutch corporate taxes. Tesla Motors Singapore Holdings owns more than 99% of TM International and received roughly $18 billion in profits from it between 2023 and early 2025. Regulatory filings in Singapore confirm that the Singapore subsidiary is not taxed on income derived from the partnership. Neither set of filings discloses how the partnership’s profits were generated or its operational relationship with the entities that actually manufacture and sell Tesla vehicles.
How the Dutch Partnership Structure Works and Why It Matters
The non-resident partnership classification is not a loophole in the colloquial sense but a deliberate feature of Dutch tax law that has been used by multinationals for decades. A partnership registered in the Netherlands but treated as a non-resident entity for tax purposes can receive income without triggering Dutch corporate income tax liability, provided the income is not considered to arise from Dutch sources under the relevant treaty or domestic rules. The mechanism becomes valuable when combined with a receiving entity in a jurisdiction that either exempts the relevant income or treats the partnership income in a way that avoids taxation at the recipient level as well.
In Tesla’s case, Singapore is identified as the receiving jurisdiction. Singapore’s corporate tax rate is 17%, but its participation exemption and foreign-sourced income exemption regimes allow certain categories of income received from foreign entities to avoid taxation domestically. For the arrangement to work as described, the $18 billion must have qualified under one or more of those exemptions in Singapore, which is what has placed Singapore on the Dutch government’s investigative radar and on the European Parliament’s grey-listing shortlist for some time.
The Dutch government’s investigation was triggered by parliamentary questions that, while not naming Tesla directly, were transparently about the company’s corporate structure. The inquiry fits into a pattern of Dutch legislative action: anti-abuse rules introduced in 2020 targeted withholding tax arrangements that had previously allowed profit extraction from the Netherlands without taxation, and those rules appear to be what prompted Tesla’s insertion of the Singapore entity between its Dutch operations and its US parent in the first place. The structural adaptation, inserting a new tax-advantaged jurisdiction between the two that were being regulated, illustrates the standard multinational response to targeted anti-avoidance legislation.
The Switzerland Pivot and What It Signals
Tesla’s January 2026 annual filing disclosed that more than 90% of its global profits in 2025 were earned in the United States, a figure that contrasts sharply with the prior five-year average of 27% during the 2020 to 2024 period, suggesting the company may have wound down or restructured the offshore arrangement. Whether the restructuring reflects a response to regulatory scrutiny, a change in business operations, or anticipation of the OECD Pillar Two minimum tax is not publicly stated by Tesla, which has not acknowledged or explained the shift.
What has changed structurally is that Tesla’s Dutch entities are now owned by a Swiss company as of 2025, a reorganisation whose rationale has not been publicly explained. Jan Vleggeert, professor of tax law at Leiden University, has argued publicly that the Dutch investigation should not stop at Singapore but should extend to Switzerland and potentially other jurisdictions with favourable corporate tax regimes. Switzerland’s effective corporate tax rates for holding and service entities, while higher than Singapore’s under the specific exemptions Tesla likely used, remain competitive within Europe, and the country has been a preferred intermediate holding location for US multinationals managing European earnings for decades.
OECD Pillar Two and the Enforcement Gap
The policy framework that should have addressed this type of structure is the OECD’s Pillar Two global minimum tax, agreed in 2021 and targeting a 15% effective tax rate for multinationals with revenue above €750 million. As of July 2025, 27 OECD countries have adopted an income inclusion rule under Pillar Two, and 24 have adopted an undertaxed profits rule, but the US, under the Trump administration, has opposed the deal and demanded that countries exempt US firms from the undertaxed profits rule. That combination, widespread but not universal Pillar Two implementation, active US resistance, and the Trump administration’s demand for carve-outs for American companies, creates precisely the enforcement gap through which the Tesla structure operated.
The Netherlands submitted its 2026 Tax Plan to parliament in September 2025, incorporating OECD administrative guidance and implementing DAC9, a European directive requiring disclosure of Pillar Two-related information. Whether Pillar Two closes the specific gap that the Tesla structure exploited depends on whether the profits booked in the Netherlands-Singapore arrangement qualify as being taxed below the 15% threshold in a jurisdiction where the top-up tax can be applied. The technical answer requires information about the structure that neither Dutch nor Singapore filings currently provide publicly.
The Dutch investigation is therefore operating in a context where the theoretical enforcement mechanism, Pillar Two, is partially implemented, politically contested, and structurally dependent on information that the same multinationals being investigated are not currently required to disclose in the jurisdictions they are using. Country-by-country reporting, which would require Tesla to disclose profits and taxes paid in each jurisdiction where it operates, exists in restricted form accessible only to tax authorities rather than the public, making independent verification of what the Dutch and Singapore structure actually achieved in tax savings reliant on the kind of corporate filing analysis that Reuters conducted rather than on mandatory transparency. The distance between the policy ambition of the 2021 OECD agreement and what enforcement agencies can actually see and act upon in 2026 is, in practical terms, what the Chiyoda Toyota Tesla structure navigated successfully for at least two years.
