Italy to Press Fiat Chief Over His Commitment to Country
The Italian government plans to press Fiat SpA (F) Chief Executive Officer Sergio Marchionne over concerns he’s shifting the carmaker and heavy truck manufacturer Fiat Industrial SpA away from the country.
Industry Minister Flavio Zanonato told newspaper Il Sole 24 Ore that he will meet with the CEO next week to ask about Italy’s future role at the two companies. Zanonato’s comments were confirmed by an Industry Ministry representative today.
Fiat Industrial is planning for tax purposes to have its fiscal headquarters in the U.K. after completing a merger with tractor unit CNH Global NV. (CNH) Fiat, the country’s biggest private employer, is evaluating moving its corporate headquarters to the U.S. from Turin after a planned combination with Chrysler Group LLC, three people familiar with the matter said last week.
The possible move away from Italy has unsettled labor leaders, who have asked the government to take action to protect jobs. Any shift is especially sensitive with unemployment in Italy near a 20-year high. Marchionne has also said he’s looking at primary listings for the two companies in New York City to gain better access to capital markets.
The merged Fiat Industrial-CNH plans “to operate in a manner to be treated as resident in the United Kingdom for tax purposes,” the company said in a Securities and Exchange Commission filing released this week. The merged entity plans to move its main corporate offices to the Netherlands, it said. “A fiscal domicile in the U.K. will put shareholders of the new company on the same level with investors of its main competitors,” Fiat Industrial (FI) said today in a statement.
The U.K. has been cutting corporate taxes, with the rate set to fall to 20 percent in 2015 from 30 percent in 2007. In Italy, companies pay 31.4 percent of their earning in taxes.
Fiat Industrial, which was spun off from Fiat in 2011, paid 564 million euros ($730 million) in corporate tax last year with an effective rate of 38 percent, according to its annual report.
Marchionne is also evaluating moving Fiat’s corporate headquarters to the U.S. from Turin, where the company was founded in 1899, because the main sources of revenue and profit are shifting to North America, the people said. Fiat earned 75 percent of 2012 operating profit in the region.
Fiat said May 16 the headquarters issue is “not on its agenda now.”
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