Fiat Industrial To Become UK Tax Resident
30 May 2013
Posted by: Author: Ulrika Lomas
Source: Ulrika Lomas (Tax-News.com, Brussels)
A political row has been developing in Italy over the proposed merger of Fiat Industrial, the Italian-based tractor and truck producer, and CNH Global, the manufacturer of agricultural and construction equipment and already majority-owned by Fiat Industrial, because the new company (NewCo) will have its tax domicile in the United Kingdom, rather than Italy.
It is intended that NewCo, formed out of the merger, will retain CNH Global's residency in the Netherlands, as well as its listing on the New York Stock Exchange. However, Fiat Industrial has stressed, in a statement, that the selection of its tax domicile is fully consistent with the main objectives of the transaction – the establishment of a global player in its market that is attractive to international investors.
After having examined the various bilateral treaties against double taxation, the group believes that establishing its tax domicile in the UK, which is fully consistent with all applicable regulations, and for which a ruling has been requested from the competent authorities in the Netherlands and the UK, will put NewCo in the same position as its principal competitors.
News of the move prompted media reports that that Italy would lose out on more than EUR500m (USD645m) in tax revenues, and a backlash from the Italian Government that is trying to improve tax collections and compliance. However, those reports have been completely refuted by Fiat Industrial.
In the statement, it is pointed out that, in Italy and elsewhere, the group's companies maintain a legal presence in the various countries where they operate and will continue to pay taxes in those jurisdictions as before. The EUR500m tax figure, it is said, is based on an aggregate of the taxes payable by its individual subsidiaries according to local tax laws.
In fact, Fiat Industrial discloses that 46 percent of that amount relates to companies operating in North America, 11 percent to companies in Latin America, and 27 percent to companies in Europe, with only 5 percent of the total attributable to the group's activities in Italy.