♠ Posted by Emmanuel in Europe at 12/11/2014 01:30:00 AM
|Ferrari leaving Maranello is the secular equivalent of the Pope leaving the Vatican.|
As if controversies over parent company Fiat becoming more of an "American" company weren't enough, we now have word that Ferrari itself--the quintessential pride of Italy--may be relocating because of tax purposes:
Ferrari SpA is considering moving its fiscal residence outside Italy to save on corporate taxes as the supercar maker prepares for its spinoff from Fiat Chrysler Automobiles NV (FCAU), people familiar with the matter said. The manufacturer, which uses the colors of the Italian flag in its logo, may follow in the footsteps of Fiat Chrysler, which is registered in the Netherlands, listed on the New York Stock Exchange and based in London for tax reasons, said the people, who asked not to be identified because the discussions are private.Make no mistake: doing business in Italy has not been a walk in the park these past few years:
Other options including keeping its Italian residence are still on the table, and a shift in its fiscal residency wouldn’t affect its manufacturing and engineering operations in Maranello, about 190 kilometers (118 miles) south of Milan, the people said. A final decision will be made in coming months, the people said. Fiat Chrysler representatives declined to comment.
Ferrari shifting its corporate headquarters outside Italy would represent a symbolic blow for the country, which is struggling to end a cycle of recessions. Prime Minister Matteo Renzi is attempting to push through labor and tax reforms to make the Italian economy more competitive. Those efforts have already come too late for Fiat Chrysler and CNH Industrial NV, the truck and tractor maker spun off from Fiat in 2011. Both companies have already moved their headquarters to the U.K. from Italy.
Fiat Chrysler and CNH benefit from the U.K.’s corporate tax rate declining to 20 percent next year from 21 percent. Income from patents will eventually be as low as 10 percent, offering potential for additional relief. By comparison, Italy’s corporate rate is 31.4 percent. The country is ranked 56th in the World Bank’s Doing business ranking, just after Turkey and Hungary. The U.K. is 8th.The situation of Fiat is illustrative of the lengths modern corporations go to in order to reduce tax burdens. Actually, Fiat Chrysler is a holding company in the Netherlands whose tax domicile is in the UK. None of its main operations are in either the Netherlands or the UK, but they are structured to appear that way on paper for tax purposes. It's a long story, but these sorts of structures are common for all sorts of MNCs nowadays--even sellers of chicken. On one hand, the crackdown of tax authorities which prompts these sorts of moves illustrates the situation of many Western European nations circa 2014. On the other hand, the brazenness with which companies "headquarter" themselves elsewhere depicts the multitude of structures that have been developed for hust this purpose.
Hampered by stifling policies, the Italian economy has stagnated over the past 14 years and contracted 10 of the last 11 quarters. Unemployment rates are near record levels, and thousands of Italians have left the country in search of a better future. Last year, the number of emigrants from Italy rose 19 percent to 126,000, according to statistics agency Istat.