Tesla Investors Fear Tax Bill Over Possible SpaceX Merger Despite Not Selling

At a glance

Merger talks between Tesla and SpaceX are ongoing, and domestic investors are worried about the tax burden. This is because gains could be taxed during the share exchange process in a merger.

Key points

1. 1

   If Tesla shares are swapped for SpaceX shares in a merger, tax law treats it as a sale, and a 22% tax is charged on the gain.

2. 2

   Cross-border deals do not get the tax deferral benefit that domestic company deals receive, so taxes must be paid even without receiving cash.

3. 3

   The larger the premium (the extra amount added in the share exchange), the more shareholders receive after paying taxes.

4. 4

   Tesla's shareholder meeting will be held on December 3, and the approval rate there will be a signal of how much leverage the company has in merger negotiations.

Why it matters

Domestic investors hold the largest amount of Tesla shares, about 31 trillion won, so if merger terms are announced, they would face a direct tax burden.