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A company logo is seen on a Fiat car displayed on media day at the Paris Mondial de l'Automobile, Sept 28, 2012. [Photo/Agencies]? |
Fiat?boss Sergio Marchionne, the veteran dealmaker who has just wrested full control of Chrysler from its retirees, is about to unveil his next trick: moving the group's 115-year-old headquarters out of Italy.
While Marchionne has said a New York share listing is on the cards, he is likely to base the new company in Europe under a tax-efficient UK domicile, sources close to the company say.
The CEO is treading carefully in the United States and Italy, whose governments have bailed out Chrysler and funded temporary layoffs at Fiat. He is aware that Rome may intervene.
"I've seen weirder things happen," Marchionne told reporters at the Detroit auto show earlier this month. "So I sincerely hope they don't create obstacles."
Fiat is taking full control of Chrysler after striking a $4.35 billion (2.62 billion pounds) deal to buy the 41.5 percent it didn't already own from a union retiree healthcare fund.
The deal, which closed on January 21, creates the world's seventh-largest automaker with operations in 40 countries and brands including Alfa Romeo, Dodge, Ferrari, Jeep and Maserati.
A neutral country base could help anchor the merger. Previous owner Daimler's attempt to run Chrysler from Germany ended in failure and a $29 billion loss.
But there are tax-related incentives too.
Registering the group in the Netherlands with a UK tax domicile - as Marchionne did with the spun-off CNH Industrial - could ultimately deprive the United States and Italy of tax revenue on some overseas earnings, experts say.
Britain has steadily cut its corporate tax rate - to a proposed 20 percent in 2015 - and reduced the tax burden on profit from foreign subsidiaries in low-tax jurisdictions.
Marchionne, 61, a trained lawyer and tax accountant by training, is due to present his proposals to Fiat's board on Wednesday. The company declined to comment.
He is likely to stick to the template by putting the tax domicile and some corporate functions in Britain, sources close to Fiat said.
Created in a 2013 merger between Fiat's former tractor division and U.S. rival CNH, the company is registered in the Netherlands, tax-resident in Britain and traded primarily in New York, with a secondary share listing in Milan.
Unlike Italy, Britain has no withholding tax on dividends from foreign operations. One beneficiary would be Fiat's founding Agnelli family and its Exor holding.