German Volkswagen sues India over $1.4B tax bill

Volkswagen, the German multinational conglomerate known for manufacturing passenger and commercial vehicles, motorcycles, engines, and turbomachinery, has announced that it is suing India over a $1.4 billion tax bill.

Volkswagen sues India

The German automaker has announced it is suing Indian authorities over a $1.4 billion tax bill, according to Reuters.

Volkswagen claims that these tax regulations contradict New Delhi’s import taxation rules and will significantly affect the company’s sales.

Notably, in September 2024, India imposed a $1.4 billion import tax notice on Volkswagen. The company adopted a new strategy, importing separate parts of its vehicles through its subsidiary companies, Skoda and Audi.

Volkswagen used this approach to pay lower taxes on the parts rather than on fully assembled cars and vehicles.

The company stated that it had kept the Indian government informed about its import policy, known as the ‘part-by-part import’ model.

In its statement to the court, Volkswagen said: “The tax notice is in complete contradiction of the position held by the government … (and) places at peril the very foundation of faith and trust that foreign investors would desire to have in the actions and assurances of the administration.”

The Indian finance ministry and customs officials have not commented on the matter so far, while the company in India has reassured that it is in compliance with Indian customs and tax laws and regulations.