MILAN (AFP) – Auto giant Fiat Chrysler (FCA) yesterday refuted a claim by Italian tax authorities that it seriously undervalued the United States (US) side of its business in order to pay less tax.
The authorities are accusing FCA of having underestimated Chrysler’s value by EUR5.1 billion (USD5.6 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 per cent at the time, suggesting that FCA could now be called on to settle an additional bill of around USD1.5 billion – just as it prepares another merger with the French automaker PSA Group.
Shares in the Italian/US carmaker were 0.42 per cent lower yesterday 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 US. 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.