ZCZC
BCN-27
ITALY-US-AUTOMOBILE-TAXATION
FCA refutes claim it undervalued Chrysler to cut taxes
MILAN, Dec 5, 2019 (BSS/AFP) – Auto giant Fiat Chrysler (FCA) on Thursday
refuted a claim by Italian tax authorities that it seriously undervalued the
US side of its business in order to pay less tax.
The authorities are accusing FCA of having underestimated Chrysler’s value
by 5.1 billion euros ($5.6 billion) following its phased acquisition several
years ago, according to Bloomberg News, which saw the taxman’s report.
“We strongly disagree with this preliminary report, and we are confident we
will successfully make the case for a material reduction in the assessment,”
an FCA spokesperson contacted by AFP said in a statement.
The Italian group Fiat completed its acquisition of Chrysler in 2014. Fiat
Chrysler Automobiles (FCA) then moved its corporate headquarters from Turin
to the Netherlands and its tax headquarters to Britain.
That made it subject to a capital gains tax companies must pay when they
transfer assets out of Italy.
The country had a corporate tax rate of about 27.5 percent at the time,
suggesting that FCA could now be called on to settle an additional bill of
around $1.5 billion — just as it prepares another merger with the French
automaker PSA Group.
Shares in the Italian/US carmaker were 0.42 percent lower Thursday in
midday trading on Milan’s FTSE Mib stock exchange owing to the tax-dodge
allegation.
The dispute comes at a bad time for FCA as it negotiates with PSA (Peugeot
Citroen) and faces a potential scandal in the United States.
In November, General Motors filed a federal lawsuit against FCA, alleging
that it bribed auto union officials to secure an unfair advantage in labour
talks and to force it to agree to the Fiat Chrysler merger.
A source close to the FCA-PSA negotiations said the tax-dodge allegation
would not affect that merger, because the accusation “was already known about
and had been published” in writing.
BSS/AFP/SR/1925 HRS